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An investigation of budgeting and budgetary control: Case of ABC heavy industries
Public Company Limited (ABCHI)
JAMIE JUNG PARK
Burapha University
2018
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JAMIE JUNG PARK
งานนิพนธ์น้ีเป็นส่วนหน่ึงของการศึกษาตามหลกัสูตรบริหารธุรกิจมหาบณัฑิต (หลกัสูตรนานาชาติ)
วทิยาลยัพาณิชยศาสตร์ มหาวทิยาลยับูรพา 2561
ลิขสิทธ์ิของมหาวทิยาลยับูรพา
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AN INVESTIGATION OF BUDGETING AND BUDGETARY CONTROL: CASE OF
ABC HEAVY INDUSTRIES PUBLIC COMPANY LIMITED (ABCHI)
JAMIE JUNG PARK
AN INDEPENDENT STUDY SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR MASTER OF BUSINESS ADMINISTRATION
(INTERNATIONAL PROGRAM)
IN BUSINESS ADMINISTRATION
GRADUATE SCHOOL OF COMMERCE
BURAPHA UNIVERSITY
2018
COPYRIGHT OF BURAPHA UNIVERSITY
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ABST RACT
59740002: MAJOR: BUSINESS ADMINISTRATION; M.B.A. (BUSINESS
ADMINISTRATION)
KEYWORDS: FPSO, OFFSHORE PROJECT, MODULES BUDGET, COST
CONTROL
JAMIE JUNG PARK : AN INVESTIGATION OF BUDGETING AND
BUDGETARY CONTROL: CASE OF ABC HEAVY INDUSTRIES PUBLIC
COMPANY LIMITED (ABCHI). ADVISORY COMMITTEE: SUPASIT
LERTBUASIN, 2018.
During the project is reaching to the completion, buffer time in project
management is critical, reasons such as when the extra time was required or when
unexpected critical chain duration has been changed due to different deviation results.
In this independent study, financial management and possible assumption to predict
how to reduce the cost for the project, also will be finding out the key main solutions
involving.
The main example of this project will be “P70 off-shore Modularization
Project (TUPI FPSO Project)” fabricated by ABC Heavy Industries Public Company
Ltd (ABCHI). Off-Shore Modularization Project is one of a large scale of fabrication
job including the scope of engineering, procurement and construction (EPC). The
company is required to estimate the cost of EPC scope, all different duties and buffer
cost to be calculated properly in order to have net profit margins. Therefore, P70
project will be the case of how ABCHI to be calculated and managed to predict the
amount of cost consumption and measurement can be improved. ABCHI had been
completed previous projects called P66, P69, which means they have the past
experience of completing the replicant modularization projects. P70 will be described
and possible solutions for how to make proper budgetary will be concluded in this
independent study including human perspectives.
Objective of this study is to determine whether budget is actually
important for their business and how it needs to be estimated the cost in order to make
sure the project cost to be in the budget. There can be possible many reasons and
causes that why the results are different, and this independent study (IS) will identify
the issues and make possible new solutions for the heavy industries company. A
budget is a functional statement prepared prior to a predetermined period of time of
the policy to be pursued during that period for the purpose of obtaining given
objectives. Budgeting and budgetary control systems play a leading role in every
company or institution by helping in establishing an efficient management control
system for creating sustainable competitive advantage. The aim of this study was to
conduct research concerning the budgeting practice in ABCHI.
This case study of research enables to define problem. This research
identifies possible problems relate to budgeting at ABCHI.
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E
ACKNOWLEDGEMENT S
ACKNOWLEDGEMENTS
I would like to acknowledge my warmest thanks to my advisor, Dr.Supasit
Lertbuasin who made this work possible. His friendly expert advice have been invaluable
throughout all stages of the work.
I would also like to express my special appreciation and thanks to Mr.Young Jun
Lee. I am truly grateful that he supported me all the way through to accomplish this
journey. He is my life guidance and this work would not have been possible without his
support.
I owe a special thanks to Ms.Teerapan Qanwaree who helped me through out
during my thesis submission, without her support, I cannot imagine how I could organise
everything by myself, truly appreciate her kindness.
Nobody has been more important to me in the pursuit of this project than
Ms.Chanchira Smakthai, who provide unending inspiration. I would like to thank to her,
whose love and guidance are with me.
Lastly, I want to thank to my family, especially my mother being so
understanding and for putting up with me through the toughest moments of my life.
Jamie jung Park
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TABLE OF CONTENTS
Page
ABSTRACT .................................................................................................................. D
ACKNOWLEDGEMENTS .......................................................................................... E
TABLE OF CONTENTS ............................................................................................... F
LIST OF TABLES ......................................................................................................... 1
LIST OF FIGURES ....................................................................................................... 1
CHAPTER 1 INTRODUCTION ................................................................................... 1
Background of the study and statement of the problem ............................................ 1
Purpose of the study ................................................................................................. 10
Conceptual framework ............................................................................................. 10
Contribution to new knowledge ............................................................................... 12
Scope of study .......................................................................................................... 12
Limitations ............................................................................................................... 12
Definition of terms ................................................................................................... 13
CHAPTER 2 LITERATURE REVIEWS .................................................................... 15
Company introduction ............................................................................................. 15
Main types of budget (fixed and flexible budget) ................................................... 18
Budget manual objectives ........................................................................................ 27
Financial management ............................................................................................. 29
Development of financial management ................................................................... 32
Related researches ................................................................................................... 33
CHAPTER 3 RESEARCH METHODOLOGY .......................................................... 35
Research design ....................................................................................................... 35
Research methodology ............................................................................................. 37
Population and sample size ...................................................................................... 46
Research instruments ............................................................................................... 46
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Data collection ......................................................................................................... 47
Data analysis ............................................................................................................ 48
CHAPTER 4 RESULTS .............................................................................................. 54
Qualitative results .................................................................................................... 54
Learning and knowledge management .................................................................... 71
Quantitative results .................................................................................................. 71
CHAPTER 5 CONCLUSION, DISCUSSION AND RECOMMENDATIONS ......... 80
Conclusion ............................................................................................................... 80
Discussion ................................................................................................................ 82
Recommendation from the research ........................................................................ 86
Recommendation for the future research ................................................................. 86
REFERENCES ............................................................................................................ 88
APPENDICES ............................................................................................................. 93
APPENDIX 1 ........................................................................................................... 94
APPENDIX 2 ........................................................................................................... 98
APPENDIX 3 ......................................................................................................... 119
APPENDIX 4 ......................................................................................................... 123
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LIST OF TABLES
Page
Table 1 Procedures of jobs Lv 1 to Lv 4 ........................................................................ 5 Table 2 Breakdowns of task of activity for costing ...................................................... 41
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LIST OF FIGURES
Page
Figure 1 Completed schedule of 03B project ............................................................... 2 Figure 2 FPSO diagram ............................................................................................... 3 Figure 3 Image of scope of modules for ABCHI........................................................... 4
Figure 4 Diagram of conceptual framework for the concept of budget and actual ... 11 Figure 5 Overview of budget review ........................................................................... 28 Figure 6 Estimated and actual operation cost from 2015-2017 (Quarter basis) ....... 40 Figure 7 Gross benefits that is increasing in consumption under the demand curve. 52 Figure 8 Operation Cost Results for Replicant EPSO Project ................................... 72
Figure 9 Detailed breakdown of Operation Cost for Replicant FPSO Project .......... 78 Figure 10 Flow chart for summary of budgetary and cost control ............................ 84
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CHAPTER 1
INTRODUCTION
Background of the study and statement of the problem
Budgeting allows the company to create spending plans, so it always has
enough money for the ability of the company to purchase and maintain the ability to
properly operate the business under control of the budgeting cost plan. If the company
is currently in debt, following the budget or spending plan also frees the company
from debt. In the context of business management, budgetary objectives include
income and expenses, forecasts of profitability from it, tools for decision-making, and
a means to monitor performance. Budget management for funds It is a way that a
company is deliberate about how to spend money.
It is not always possible to determine the value of a particular asset.
However, it is important to consider the different types of decisions that the financial
sector faces, as management is constantly faced with decisions about which assets to
invest. It may be necessary to discuss how to estimate the benefits and costs
associated with the possible decisions.
ABCHI is an example of understanding how budgeting is necessary and find
out why the budget and the actual cost spending are different. This study also
investigates the issues of different cost calculations and provides possible solutions.
Floating Production Storage and Offloading (FPSO) will be the case study of
this company’s modularization scope. ABCHI has completed 03B modularization
projects. Each project had a total of 4 modules to complete; each module was
replicant for 03B; the modules are CO2 Compression (M01), Export Gas
Compression (M04), Main Gas Compression (M06), and VRU System and Gas
Injection Compression (M07).
Completed schedule from 2015-2017 for above modules are available on the
next page.
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Figure 1 Completed schedule of 03B project
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What are a Floating Production Storage and Offloading (FPSO)?
The Floating Production Storage and Offloading (FPSO) is considered as a
facility to keep oil tank in a hull. It contains hydrocarbon where unit to process for
crude oil, water and gas separation and processing, which arrives onboard from a
bottom oil well via a flexible pipeline.
The processed oil then transport to the tank of the cargo which located at the
hull of FPSO. Those extracted gas may use for power generation as it could be used
as fuel, and the surplus gas could resend to the pipeline, export to the land or to the
reservoir. However, discharging to the reservoir or to the land could be only permitted
by certain allowed environmental law level.
The FPSO may allow oil production to be active in a number of remote
locations and deeper than before in the water level as well, these were possible
through getting advanced technology and economically being supported for this
production. In addition, there is a capacity for the storage for produced processed
crude oil and does not necessarily to have pipeline to transport the oil on land,
however, unload to transfer the oil to the tanker for transport to the refinery is
necessary, it all has a system.
Turret mooring system is also another feature of FPSO. It is mounted inside
the FPSO hull and consolidate into the hull. FPSO can be freely rotated 360° around
the turret (“weathering”). FPSO usually goes into a general environment.
Figure 2 FPSO diagram
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Figure 3 Image of scope of modules for ABCHI
Statement of the problem
For further explanation for the scope of ABCHI, modules M01, M04, M06
and M07 were the jobs for which the company was awarded a contract to complete
the EPC (Engineering, procurement, construction) job.
Possible statement of problems are such as what are the exact scopes or the
budget to be approved to proceed. In order to find out the differences and the
operation costs and actual budget to be compared and find the problem where the
most highest cost that company is spending and how shall be prevented.
This case study of ABCHI operation costs of Replicant FPSO Units project
(03B) has been analyzed from 2015 to 2017 on a quarterly basis; the cost is analyzed
by each section as follows:
Direct material, Consumables, Labor, Services & Rentals, Transportation,
Overhead and Cost. Every these costs are recorded by both actual and estimated cost.
These differences will be discussed further.
Procedures of each step of completing the jobs are described in the table
below for further clarification. Lv 1 to Lv 4 been added. Lv 1 is the most critical to be
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considered and then so on up to Lv 4. Steps been added as in order until the load is
out.
Table 1 Procedures of jobs Lv 1 to Lv 4
Level Category Job description Comment
L1 Management Management Plan for
Project
L1 Engineering Engineering execution
plan
L2 Structure Structure design
L3 Structure Structure details-main/
Secondary/ Tertiary
L4 Structure Shop drawing
L4 Structure Cutting plan
L2 Piping Piping design
L3 Piping Pipe and Instrumentation
Drawing (P&ID)
L4 Piping Isometric drawing
L4 Piping Cutting plan
L2 Equipment Equipment design
L3 Equipment Equipment layout plan
L4 Equipment Equipment support
drawing
L4 Equipment Equipment installation
drawing
For TUPI BV, issued by
Critical Long Lead Item
(CLLI) vendor
L2 E&I E&I design
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Table 1 (Continued)
Level Category Job description Comment
L3 E&I Pipe and Instrumentation
Drawing (P&ID)
L3 E&I Electrical distribution plan Layout plan for Power,
Grounding and control,
Lighting, Telecommunication
L4 E&I Cable tray drawing
L4 E&I Cable route drawing
L3 E&I Instrumentation plan Layout for instrumentation
L4 E&I Hook-up drawing
L1 Procurement Procurement execution
plan
L2 Structure Purchase order for
structure
Shape/ Plate/ Handrail/
Grating/ etc.
L2 Piping Purchase order for piping Pipe/ Fitting/ Flange/ Manual
valve/ etc.
L2 Equipment Purchase order for
equipment
For TUPI BV, Pre-issue item
(CLLI)/ Vessel scope by
constructor
L2 E&I Purchase order for E&I Cable/ Cable tray/ Instrument
L1 Construction Construction & assembly
plan
L2 Structure C&A for structure
L3 Structure Fabrication & installation
L4 Structure Cutting materials
L4 Structure Fabrication
L4 Structure Coating
L4 Structure Assembly
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Table 1 (Continued)
Level Category Job description Comment
L3 Structure Test & inspection of
structure
L4 Structure NDE inspection
L4 Structure Dimension inspection
L2 Equipment C&A for equipment
L3 Equipment Installation
L4 Equipment Assembly of skid/
equipment on ground
If required (normally,
supplier finished assembly by
skid)
L4 Equipment Milling for equipment
support
L4 Equipment Installation of equipment
L3 Equipment Test & inspection of
equipment
L4 Equipment Leveling survey
L4 Equipment Pre-shaft alignment If required (normally, activity
shall be done in integration
yard)
L3 Equipment Preservation
L2 Piping C&A for piping
L3 Piping Fabrication & installation
L4 Piping Cutting material
L4 Piping Fabrication
L4 Piping Coating
L4 Piping Installation of support
L4 Piping Assembly pipe line
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Table 1 (Continued)
Level Category Job description Comment
L4 Piping Insulation After finishing test &
inspection
L4 Piping Inertization By nitrogen
L3 Piping Test & inspection of
piping
L4 Piping NDE inspection
L4 Piping Bore scope Include video inspection
L4 Piping Bolt torque/ Tensioning
L4 Piping Leak test With equipment & valves
L3 Piping Preservation
L2 E&I C&A for E&I
L3 E&I Fabrication & installation
L4 E&I Fabrication of support for
cable tray
L4 E&I Installation of cable tray/
Support
L4 E&I Pulling cable line
L4 E&I Fabrication of support for
instrument
L4 E&I Installation of support/
Instrument
L4 E&I Connection with tubing
line
L3 E&I Test & inspection for
piping
L4 E&I NDE inspection for
support
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Table 1 (Continued)
Level Category Job description Comment
L4 E&I Calibration of instrument Before installation of
instrument
L4 E&I Cable continuity test
L4 E&I Air supply & leak test for
tubing
L4 E&I Function test/ Lighting lux
test
L4 E&I Instrument loop test
L3 E&I Preservation
L1 Load-out Load-out & sea
transportation
L2 Load-out Packing & preparation for
load-out
L3 Load-out Packing & disassembly
plan
L3 Load-out Disassembly ship loose
part
L4 Load-out For load-out Scope by constructor in
integration yard
(INCOTERM : CFR)
L4 Load-out For lifting on site Scope by owner in
integration yard
(INCOTERM : CFR)
L3 Load-out Packing ship loose items
L4 Load-out Packing list
L4 Load-out Packing by ship loose/
Container
L3 Load-out Weighing
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Table 1 (Continued)
Level Category Job description Comment
L3 Load-out Preparation for load-out
L2 Load-out Load-out
L3 Load-out Load-out manual/ Plan
L3 Load-out Load-out activity
L3 Load-out Test & inspection
L4 Load-out NDE inspection for
grillage & sea-fastening
L4 Load-out Marine warranty survey
L4 Load-out Certificate of approval for
items
From marine warranty
surveyor
L3 Load-out Sea transportation
L4 Load-out Issuing documents for
transportation
Packing list/ Commercial
invoice/ Bill of lading
L4 Load-out Certificate of approval for
sail away
From marine warranty
surveyor
L4 Load-out Move out from port
Purpose of the study
The purpose of this study is to determine the impact on the actual cost of the
entire process of a project, and to properly calculate the budget to reduce unexpected
or unnecessary spending on the project. This case study focuses not only on numbers,
but also on human error, different understandings, survey methods, etc., to find out
what's the whole thing as accurate.
Conceptual framework
Conceptual framework provides a general system of how the project to be
awarded and the budget to be prepared. There shall be a basic concept of framework
in their organization making a question before start such as ‘what are the possible
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reasons and solutions?’ or the actual project spent cost and project budget are
different? From using this beginning period of questioning may support to make
summary with a simple concept of understanding.
Actual project spent cost
Quantitative
Depth interviews with top
management
Cost estimation and
calculation
Qualitative
Project budgetary
Solutions based on the research
Project
What are the possible reasons and
solutions?
If different, why?
Figure 4 Diagram of conceptual framework for the concept of budget and actual
project cost
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Contribution to new knowledge
This research can addresses possible assumptions of cost budget and
management’s experience to share their knowledge through interviews, and able to
apply to decision making to organization. Each different perspectives of their different
opinions to summarize in order to provide new ideas and knowledge of possible
solutions for their business.
Scope of study
This research consists of 4 scopes of study including;
1. Scope of content
The content of this research comprise of off shore fabrication projects
involving qualitative and quantitative methods to find out how the cost control can be
created most efficiently.
2. Scope of population
The population of this research is manpower who is all involved in this
03B Project as in quantitative method samples are 1,200 and for qualitative method,
top management was involved and samples are 4.
3. Scope of location
The location of this research is in Thailand at ABCHI Public Company Ltd,
Rayong, at the main office.
4. Scope of time
The timing period of this research has been conducting since 2017 until
2018.
Limitations
This study is limited to ABC Heavy Industries Plc. As an organization that
considers that the company itself must compete with competitors, applying the
concept of budgeting in Rayong and its business operations. This may not justify the
credibility of all information can be used for any other all companies.
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Definition of terms
Cable tray – Refer to covering and support electrical cables to control
electrical charge to manage.
Construction – Refer to manufacturing skills to fabricate all parts of
fabricating jobs, such as piping, installation, welding, inspection, painting and others.
Consumable – Refer to items that can be replaced easily in a short period of
time.
C&A – Certification and Accreditation for projects are required to satisfy
certain requirement to accomplish.
Direct material – Refer as raw materials in order to complete the project.
Engineering – Refer to designed and calculate the whole module to
complete the set.
Equipment – Refer to items that to be installed in the module, which is a
complete set of item that can be used through the line.
E&I – Equipment and Instrument that are referring to be installed as a
machine to operating in the modules.
Fabrication – Refer to a process of manufacturing or constructing
FPSO – Floating Production Storage and Offloading is considered as a
facility to keep oil tank in a hull.
Hydrostatic test – Test involving with water pressure to make sure the lines
to be complied to required pressure to be taken.
Inertization – Refer to decrease the flammability of materials inerting a gas
to reduce chemical reactions
Leveling survey – Refer to checking a level of height and elevation of line
to be equivalent.
Module – Each required structure parts and E&I to be installed as a building
to contain as a unit of oil and gas to keep.
NDE inspection – Nondestructive testing that to make sure the materials are
not destructed
Overhead cost – Fixed expenses for operating business, meaning it could be
related to constant amount of cost that to be spent.
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Procurement – Refer to action of purchasing, delivering and make sure all
the required specifications are met to comply for the project.
P&ID – A piping and instrumentation diagram for engineers to able to
check in details.
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CHAPTER 2
LITERATURE REVIEWS
The literature review consist of
1. Company introduction
2. Main types of budget (fixed and flexible budget)
3. Other types budget
4. Budget manual objectives
5. Financial management
6. Development of financial management
7. Related researches
A total of about 20 literature reviews were used as a reference to analyze and
paraphrase their information on the topic ‘An investigation of budgeting and
budgetary control: a case study of ABC Heavy Industries Public Company Limited
(ABCHI)’. References have been indicated for each statement to support their
information, and the literature reviews were found from reliable sources such as
google scholar, university websites, and books. Each of the references has been added
and shown in the final reference list. The intention is to use literature reviews to
support this thesis statement in order to achieve a wide range of perspectives for the
concept of budgeting and budgetary control.
Company introduction
ABC Heavy Industries Public Company Limited (ABCHI) was established
in Rayong on April 19 1994 with a capital investment of 24 million baht. During this
initial period, the company had one small office and one shop with a total area of
11,200 sq.m. ABC started its business by fabricating small structures and site
installations in the industrial area of Mapthaput, Rayong.
Rayong was a designated area where the Thai government had a long term
plan for development of energy related industries such as petrochemical, chemical,
refineries etc. ABCHI started its business in order to satisfy the needs of engineering,
procurement, and construction related to this industrial area.
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Since its establishment, ABCHI has mostly been involved in the national
industrial estate development. ABCHI was involved in completing the fabrication of
32 storage tanks for the Refinery Project. The project was successfully completed and
this lead ABCHI to be contracted to another project called ‘Aromatic Plant’ to
fabricate 52 storage tanks. All of these were awarded in the first year of ABCHI's
establishment, 1994.
In 1996-1998, ABCHI faced the IMF crisis. However, ABCHI continued to
fabricate mechanical equipment with an excellent quality standard. Even facing
difficult times, ABCHI was able to contract for a large scale Fertilizer Plant Project.
ABCHI was responsible for 10,000 tons of steel structure, piping, spools, and
mechanical equipment.
ABCHI was gradually increasing their business capability with local
construction until the year 2000. ABCHI moved and expanded their factory in
Nikompattana with a total area of 550,000 sq.m. ABCHI was able to expand its
production capability and size in 2001 by re-investing the profits accumulated from
completed projects. This was a step forward to the future for ABCHI.
Starting from the year 2000, manufacturing reformers and fired heaters were
among the critical business items that allowed ABCHI to be well-positioned in the
equipment manufacturing market. ABCHI joint ventured with an Italian engineering
company called ITT S.P.A. This joint venture synergy created more business
opportunities and expertise to achieve various jobs of manufacturing reformers and
fired heaters. ABCHI successfully completed many projects such as Saudi Polyolefin
project 450,000 MPTA, Port Jerome H2 Plant France, Caojing Hyco-1 China, Priolo
H2 Plant Italy, Lavera H2 Plant France, CCR Unit for Aromatics Complex Project
ATC/ Thailand, CCR Unit for Aromatic Complex Project KPPC/ Kuwait, Ammonia
Urea Project Reformer Pakistan, Jurong Project Reformer Singapore, 2 Reformers
with Priminary Reformers Qatar, 2 Reformers-MHI Algeria, and H2 reformer
associated equipment Hermes H2 Reformer Project Singapore, etc. 100 units of
fabricating reformers and fired heaters were completed over 10 years in the 2000s.
Through those 10 years of experience and know-how, ABCHI have gained a positive
reputation as a specialized company in the field of fabricating mechanical equipment.
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The company was constantly growing, ISO 9001 was certified in 2002 and
became a certified BOI and ASME stamp holder in 2003, and then SQL was certified
in 2004.
In 2005 and 2006, ABCHI was contracted for the project ‘Alcan Gove 3
Expansion Project’. This was the first onshore modularization project in the mining
sector business, which consisted of calcination units, liquid purification units, gas
filter house, and alumina handling units. After successfully completing the job,
ABCHI was able to expose itself to the Australian market and strengthened their
Australian marketing activities to create more business opportunities.
In 2008, ABCHI had a difficult time again due to the huge international
global financial crisis. The direct effect of the crisis could have been very active
concerns. ABCHI have been challenged competitively in the field of overseas project
development. While many businesses acted very conservatively on starting jobs,
ABCHI continuously looked for more projects regardless of location and was
awarded with a job in D.R. Congo. In 2009, ABCHI completed a major on-site
construction project in Singapore called Hermes H2 Reformer Project. Even during
the difficult global financial crisis, ABCHI established a local company in
D.R. Congo to undertake a major on-site construction project, which proves that the
capability of ABCHI management is limitless even during the difficult season.
In 2011, ABCHI was awarded the modularization scope for the Australia
Pacific LNG Pty Limited (APLNG) Project, this was the highest valued contract that
ABCHI had signed since their establishment. The contract was for upstream phase 1
which consisted of 15 trains of pre-assembled units (Pre-treatment of coal seam gas)
with 1,200 units of wellhead separators. All modularized units included E&I and all
functions were tested and commissioned before delivery to Australia. This was
another step forward for modularization business. ABCHI also gained the taxpayer
recognition award from the Thai government that year.
In 2014, after 3 years of preparation for listing on the Thai Stock market
(SET), ABCHI officially opened to the public market. ABCHI changed their status to
Public Company Limited under the name of ‘ABC Heavy Industries Public Company
Limited’. Moreover, ABCHI was officially included in the SET100 and Morgan
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Stanley Capital Index (MSCI) global small cap indexes the following year. In
addition, ABCHI was certified ISO 14001 and OHSAS 18001.
Based on lot of previous experience and various kinds of know-how,
ABCHI was offered the first offshore projects (FPSO) by Petrobras in 2015. This
project was on hold for 3 years due to the Petrobras corruption scandal. ABCHI
completed the QGI FPSO Project (P75/ P77) and TUPI FPSO Project (P66/ P69/ P70)
in a very limited time. With the completion of these projects, ABCHI and Petrobras
built a strong business relationship. ABCHI was able to expose itself to the Brazilian
market with a positive reputation. It became another good opportunity for ABCHI to
connect in the Brazilian offshore heavy industries.
Main types of budget (fixed and flexible budget)
Budgeting is a well-known and considered as a critical short-term planning
job, that is, a numerical plan that shows how a company's resources can be distributed
to achieve the desired profit. Creating a budget will support the company to decide
how much the cost will go into and how much it will cost, so it will serve both
administrative and planning purposes. And since the budget is a guide to long-term
implementation, the plan requires a great deal of careful consideration (Agu, 2006,
p. 244). This literature review reviews and discusses theoretical literature research
conducted by scholars on the concepts of budgeting and budgeting style. There is also
a presentation of the main budget types and theories about the major budget elements.
Forecasting, and issues related to budgeting and management. In addition,
examine the relationship between analysis of variance and performance.
Robinson and Last (2009) states that companies for budgeting is to use a
framework for sharing of spending and the revenue. Therefore, system for budgeting
could be critical to make sure that resources are not getting wasted. The system for
cost control may support the goal of achieving their targeted incomes and outcomes
including their production.
Finance viability depends on the level of income that a company can
maintain at any time (Robinson & Last, 2009). Companies should have clear controls
in place to keep budgets in place, allocate as needed, and strictly follow, which means
differences could be understood if possible. Robin and Last (2009), however, argue
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that if a company's income is inadequate, borrowing and tax restructuring requires to
find an alternative option to fund for their estimated budget.
There are a number of determinants that affect the effective implementation
of inter-organizational budgets. According to Singh and Srinivasan (2005), these
determinants include: budget, skilled human resources, and the process of staffing and
other stakeholders involved in the budgeting process.
Despite the sufficient availability of financial resources, companies are
sufficient to consider the execution of production and decision of the enterprise, for
example, funds may support the budget execution to be active. There are a various
resources and system of structure of financial system, which means that the company
is required to make sure that accessing the funding source to fund the project and
perform its activities. According to Da Costa and Jerjen (2002), the plan of
management level is required to establish an estimated budget before carrying out the
organization project.
The budget period may not generally considered to use over than one year.
The plan of the budget and their draft financial statement should be in parallel to
match together with the company's statement and their business strategy, however in
the short term of the budget year there may be circumstances that may alter this
objective. It is important for the budget manager to receive feedback through the
monthly budget report. These reports compare budgets to actual positions and explain
the differences known as technical differences.
Management teams need to define these spending and revenue patterns over
the life of the project or through the activities the company is doing.
It may require to create a defined budget for the costs that may occur when
carrying out the planned production of the project. Realistic budgetary plan is
essential to the implementation of projects and programs (Hemanta, 2003). Budget
planning needs to be properly adjusted to remove all possible bottlenecks. In order to
save time and costs, individual budgets need to be coordinated with each other to
ensure that the implementation process takes place properly (Horngren, Forster, &
Dater, 1997). Therefore, before developing the budget, it is necessary to establish the
policy to be process for the next trading period (Da Costa & Jerjen, 2002).
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Once the budget has been finalized to use, it is required to keep monitoring
and control the budget in order to achieve the maximum efficiency to control the cost,
also it may able to adjust the budget easily in the future wise (Horngren et al., 1997).
Proper system of the budgetary plan may support fund to be available to investors,
development finance partners, and domestic and international donors (Hansen, Otley,
& Van der Stede, 2003). This could be achieved through the budget and cost control,
also not to be impacted directly from the actual results in case of any unexpected
situation such as adjustments for the stated differences between actual cost and
previous budget.
According to the article “Budget and budget management for performance
Improvement: A review of specific Food and Beverage Companies in Nigeria” by the
European Journal of Economics, Akintoye (2008), budgets and budgets apply to the
Bible era, especially the days. The Ministry of Finance reported that nothing was
obtained unless an order was written in Egypt. Joseph has a history of budgeting and
stocking grain that followed the Egyptians during the several years of starvation.
The budget was made in the early 1920s as a job to manage the cost and the
actual cash flow for industrializations jobs. Johnson and Broder (1996) say that it was
in the 1960s that companies started using the budget to indicate what they needed.
Performance improvements in the 1970s were more based on the
achievement of financial goals than on effectiveness. In the 1980s, companies faced
problems as their budget was extremely tight and they did not consider to spend any
more budget for their project. A lot of companies could not consider for customers, it
was only essential to meet sales goals.
Budgeting for corporate companies were related to the emergence of
industrial capitalism especially for the revolution in the 18th century for
industrialization, this brought challenges to the level of management. Glautier and
Underdown (2001) demonstrates that the management philosophy scientifically
focuses on information for decision-making in order to develop the management
system and their actual budgeting methods.
Budgeting in the beginning period of development was related to preparing
and demonstrating capability of organizing information to justify accountability to
enable correct performance assessment with the best results. The function of
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budgeting has been changed rapidly. As business organizations become more
complicated, environments become dynamic, and also emerging trends, the terms
budget and cost control have been defined and examined differently in a various
ways.
Omolehinwa (1989) is an organization whose budget is expressed
financially and shows how to use available resources to achieve what the prevailing
individuals agree, subject to concerning of imposing by respondents and the
environment. It is a priority. The meaning of strike that it recognizes the constraints
imposed on the budget, which is to confirm that the goals and goals and budget to be
achieved. Pandey and Pandey (2003) define budgets as short-term budget control
plans. It could consider as a plan to instruct management by achieving the goals for
the company.
Lucey (2003), in the definition, it states that a budget as a qualitative
description is defined as periods, including planned income, expenditures, assets,
liabilities, and cash flows. Budgets focus on the organization, support coordinate
activities, and facilitate control, however controls are generally practiced through a
comparison of actual and estimate budgets. Lucey (2003) defines that the current
budget as a quantitative concept of the whole business, department, functions for
production, or action plan prepared for financial resources such as cash or capitalism.
The process of budget preparation and agreement is a means of transforming an
organization’s overall goals into detailed and actionable action plans.
Welsh (2003) is the only comprehensive management approach that has
been developed so far, and fully aware of the manager’s dominant role when used
with sophisticated and appropriate judgment. Effective communication, participatory
development, effective control, proper feedback, responsible accounting, exception
decision making, and management flexibility. The Maestri Board of Tennessee States
the budget as the process by which an institution’s plans are transformed into
itemized, approved, systematic operational plans expressed in any currency for a
specific period.
At the management and operation levels, the budget determines what to
achieve in the future. Controls check whether the plan is realized and take corrective
action if deviations or short term falls occur (Egan, 1997). Egan (1997) emphasized
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that in the absence of effective controls, companies remain at the center of internal
and outside of forces that impede their unawareness. Such companies should be
capable to fight with powers. When a budget control system is used, a budget is
established that describes the manager's responsibilities from a financial point of view
which related to the requirements of the company’s overall requirement. There is a
comparison between actual and budgetary draft results. This is intended to ensure the
purpose of the policy, or even to demonstrate a basis for revising the policy, through
administrator actions.
Morgan (1997) states that the budget has increased beyond being merely a
cost instrument. It may consider as a management tool among others. In essence, it is
considered as the most effective tool to ensure for critical resources, especially in
performance resources, where allocated to priorities and results. This type of strategy
may allow administrators to find out when to revise the plans as they do not respond
to budgetary assumptions, such as unanticipated results, or environmental conditions,
economic conditions, market conditions, or changes in technology.
Morgan stressed that the budget should be considered to use for planning or
management tool. According to Hudson and Hudson (2008), controlling may relate to
making decisions based on information that are related to plans and actions that can
develop the use of efficiency assets and services to company’s management.
Positive management is to be based on criteria that where may compare the
actual performance. Without standards, there may not be an effective result of
achievement. Hudson and Hudson (2008) defined on the five categories in which the
standard falls, which are time, quantity, complaints, quality and values. Positive
management is a critica; management tool that demonstrates that the company is in
balance with what is needed to ensure its long-term basis of success.
According to Kawalkowski (1963), qualitative researchers state that the
literature review are based on data collection, and the literature review may effect on
the researcher's concept of their research. Morse and Field (1994) argue that the
literature review could mislead researchers to make exact decisions in research.
In this view, every results or situation to be clarified based on the view of
involvement of participants rather than prior of information. Researchers could
predict that a literature review was considered as important information to provide as
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a guideline for identifying through the past studies. Kawalkowski (1963) states that
literature review may provide a background understanding for the current information
of the topic. After the research results, analyzed and interpreted, the researchers may
review the literature again in order to associate the results which relate to the current
knowledge.
There is also a common understanding from the authors to avoid any failure
in business area, companies have a vision of gaining a strategic business plan which
require to be made accordingly that are close to the function and proper business
analysis. Long-term plans are detailed into a number of procedures in order to have
objectives of the enterprise for business. The end result of this plan is to minimize the
spending and maximize profits. This is also a possible guideline to determine the
management performance of a profit plan. This is usually done from an agreed or
approved budget. Willsmore (1934) states that budgeting is a function of service, and
are not a substitute to management, furthermore, this observes that plans for
budgeting to move from bottom up to flow up are top down.
Although Reynolds, Saunders, and Reynolds (1984) agreed with Willsmore
(1934), budget planning was the key to surviving in today’s highly technologically
competitive environment and was avoided by profit planning.
Reynolds et al. (1984) also established the official budget structure as
follows and listed the results of the credibility to use.
1. Loss of sales due to lack of production.
2. Excess inventory costs due to overproduction.
3. Excessive personnel changes.
4. General lack of control over the results of business operations in terms of
profits.
Fish and Brigham (1978) are consistent with Reynolds et al. (1984)
However, it is a guide for the budget not to limit the spending. Alternatively, it could
consider another way of using operations by carefully planning and managing, and a
tool to use corporate resources in the most productive and profitable way.
Horngren et al. (1997) defines that the budget shall not understand as a
minor concept for business operation. It is to be agreed with any possible assumptions
and opinions of other researchers. In addition, the budget is to coordinate and
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implement properly. Well-managed companies may have their own possible
guidelines or procedures for budget cycle, possible draft similar procedure could be
referred to below:
1. Plan any possible performance for the company. The level of
management should be informed in prior and shall agree on what to expect.
2. Provide a set of specific expectations that serve as the basis for
measuring actual results. Investigate the differences from the plan.
3. Take corrective action following the investigation.
4. Make another plan, taking into account the conditions and any possible
feedback charged.
According to Agu (2006), budgeting and budget management for
organization, “budget management” is for the budget as a means of guiding business
operations. In that case, the budget will be the basis for managing business operations
to define which planned targets and objectives have been achieved, and to prevent
offline drift in ‘time’. While budget management agrees to follow the budget
preparation, the budget will be supported not only by the top management but also by
the participation of the budget holder in the investigation of the solution to the
problem that has occurred.
Osisioma and Enahoro (2006) states that there is no objection with the above
with Agu (2006)’s statement referencing to the study of budgeting and budgeting in
business organizations, however budgeting may have more than one requirements
generally for management’s business operation.
Feed forward: May require to provide a basic concept of control plan at the
point of action, ie for management’s decision making.
Feedback: May require to provide measuring of management’s action plan.
According to Odeleye (1991), “to take corrective action as needed, and
perhaps to fill the gap between budget and actual performance” and prevent the
unrealistic and unexpected budgets spending.
There is no opposite perspective for claiming by the Kansas Historical
Society (1975), as management’s attention is focused mainly on the business that does
not function as planned.
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Fixed budgets
Fixed budgets are budgets that are created to remain to be the same
regardless of the productivity or sales achieved. Which means, it could be considered
as a single budget without cost analysis. The purpose of fixed cost shall be made at
the planning stage to support to clarify the broader purpose of the company that does
not split cost analysis into fixed and variable. Fixed budgets rarely have practical
value for the purpose of controlling, unless the plan is found to be as planned.
Flexible budgets are budgets that are made to change as the amount of possible
circumstances of changes, by figuring out different pattern of receiving the costs. It is
essential to use flexible budgeting for management purposes. Any kind of control can
only be performed by comparing what the actual activity level should have with the
costs incurred.
Flexible budgets
Flexible budgets often reflect changes in business plan across the company.
A number of organizations, may change in some organization and small in others.
Some organizations able to produce more units than expected without involving any
high additional demand costs, however, others may increase or decrease costs in
direct proportion to increasing or decreasing production. A flexible budget tries to
address this situation with great accuracy. This support to keep spending at the lowest
possible activity level and makes it easier to manage the spending cost.
In order to create budgets with flexibility including high accuracy, overhead
costs need to be classified as fixed as possible so as semi-variable, and variables. For
variable costs, an exact or detailed total or standard time per unit of production to be
set, and the total variable costs to be gained by multiplying the unit cost divide by the
unit or time.
Other type’s budget
The specific type of budget created by managing an organization depends on
many factors, including the size, nature, complexity, or operation process. However,
in practical situation, the possible following budgets can be considered as common
knowledge.
1. Funding budget: Funding budget includes a specific estimation of
expected cash flow for the next or next fiscal year. It could possibly to consider that
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companies to be keep existing and to be able to operating without profit as much as
can, however the company could be suspicious without liquidity. Funding budgets
identify potential cash shortage periods or money surpluses to the company. Thus, the
company mitigates any negative effects of handling money curtailment (shortage of
cash) possibly while preparing overdrafts or maximizing profits related to surplus
funds through short-term investments.
2. Profit planning: Profit planning is an understanding concept set of
budgets covering company’s operations in a given period of time. This planning is a
key achievement of the system for budgeting. This could be a high beneficial plan,
linking all business operations of the company. It consists of a variety separate
budgets which are independent, such as operating budget and financial budget.
3. Operational budget: This demonstrates how to operate the company’s
products and services. The essence of an operating budget is that an organization can
match the demand for their products.
4. Financial budgeting: This demonstrates how the company gets financial
resources while in a budgeting period of time.
5. Sales budget: The sales budget demonstrates the quantity and planned
price of their products to sell in planning. This budget may consider as very critical
concept as this is an estimate of the revenue receiving from the operation of their
business. This may support to provide a forecast of total revenue, which is an estimate
of cash receipts from customers, and also provides basic data to build a budget for
manufacturing costs and sales.
The first step in budgeting is the determination of the main budget elements.
The main factors of budget is the level of limit for the organization's operation at
some point. Usually, it is customer demand, but Borrman (1992) claims that for most
companies in developing countries like Nigeria, production equipment and
availability depend on accurate predictions of cost behavior patterns.
Reynolds et al. (1984) Many well-managed companies are achieved by
comparing their actual spending to previously set quantities adjusted for various
levels of production
On going budget or ongoing budget is a type of flexible budget that is
updated more regularly. Owler and Brown (1984) define rolling budgets by saying
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months or quarters further so that the budget can reflect the current situation. A
budget of 12 months is available at any time, and future months or quarters will be
added once the month or quarter has expired.
The desirability of continuous budgeting stems from the fact that
management is constantly looking to the future and tracking changes in the business
environment. After determining the key budget elements, forecasts are made, budget
schedules are fixed to limiting factors and their patterns. Forecasting could be an
important activity because budget effectiveness is based on accurate forecasts.
The purpose of the budget manual is to formalize the budget process for the
following reasons:
1. There is no fixed budget cycle.
2. Need to clarify the roles and responsibilities of key stakeholders in the
budget review process.
3. Improve financial effectiveness and efficiency.
It is important to manage the budget and implement it before the start of a
new fiscal year. Management should be able to know in advance what their spending,
their income level, and our potential operating margin will be next year. You can then
take action and make decisions about the group’s future based on budgetary
assumptions. By doing so, management is in the best position to know where to
allocate resources and how much cost needs to be reduced to achieve the group’s
stated goals. This will also help the Executive Committee to decide on “Persons in
charge of internal executor” and also issue a “do list” in line with the controls to
achieve the group’s goals.
Budget manual objectives
The purpose of the budget manual is to have a suitable procedure or a
guideline for a cycle of budget and to determine high-level processes in order to
follow the benefits that are to be achieved and also able to define any changes are to
be implemented:
1. Update budget and shorten completion period.
2. Identify the roles and responsibilities of those who provide the necessary
budget information.
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3. To be a clear reflection of the underlying business of the budget.
4. Reflect the evolving business management model in the budget process.
5. Integrate and understand all detailed functional budgets.
6. Review and understand the entire budget to ensure that it meets project
goals, regional strategies, and group guidelines.
7. To make the budget review process easier to understand.
8. Look at the budget to monitor planned performance.
It provides as a meaning of educating management levels, and to achieve a
proper understanding of responsibilities for the company and workers.
By conception on budget preparation and execution. This will help managers
develop a team spirit when they are encouraged to participate in the budgeting
process.
Budget review process flowcharts
The key meetings and reporting requirements for the ABCHI Company
system group are shown below:
Figure 5 Overview of budget review
Key Actors Month 1 Month 2 Month 3 Month 4
Main BoardConsideration
& Approval
Management
Board
CEO, CFO,
GOMs
Review and
Approved TT
Review &
Comment
Regions/Projects SOW Submitted Agreed on Input
Budget TeamTime Table
Issued
Input SOW in
the Budget
Agreed Input to
meet the
standard
Working
Document
Overview of Budget Review
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Financial management
In this section, it is to attempt to define the general environment in finance,
through explaining the conceptual framework for financial functions, financial
management, working capital management, and dairy farming.
Given the recent developments in dairy farming and the complexity involved
with funding, many studies have been conducted to cover different aspects of the field
of financial management and dairy farming separately, so the details about
multidimensionality. Getting started with research details the aspects of financial
management that are appropriate.
Financial management is a management activity that involves planning and
managing a company’s resources. It could be a division of business and economics
during the 1890s. Even in these days, management of finance may not have their own
fixed organization and only relies on economics theoretically.
Financial management is critical especially for practitioners. At this point,
the problem is at a developing period, there is no unanimous solution. Regardless of
the form of the business organization, people who are working at different levels are
may only be interested in certain issue rather than others in order to gain analytical
insights during processing the finances of the business concerns in their operation.
With the help of theoretical and analytical concept, this may able to perform the
functions of financial management sufficiently. The functions of this performace are
called “financial functions”.
Maximizing profit: The main point of financial management is to maximize
the margins. The company may attempt to earn their highest profit both in the short
and long term. Due to the business uncertainty, it cannot guarantee profits in the long
run. However, companies can earn the greatest profits in the long run.
The financial manager makes the appropriate financial decisions.
Maximizing assets maximizing assets (maximizing shareholder value) could also be a
primary idea for financial management. Maximizing assets could understand as
making the largest asset for our shareholders. Therefore, the financial manager tries to
give the shareholders the largest dividend. They are also trying to maximize the value
of market stocks. The value of market stocks could be connecting to the company’s
business operation. The higher achievement, the higher the market value of the stock.
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Therefore, financial managers must attempt to increase the value of shareholders for
stock.
Financial requirements for estimation: To have proper financial
requirements could relate to connecting with financial management level, meaning
financial department may require to calculate and estimate any possible requirements,
and also to figure out how much money needs have to operate business or project.
The financial department may require to find the way for the company’s
fixed and working capitals. There is a chance of shortage funds or surplus. Finance
requires considering of a variety of factors, such as involving advanced technology,
the number of employees, the size of company (cost control), and requirements of
legality.
Mobilization: Collection of funds are critical impacts for financial operation.
After plan the possible requirements for finance, the financial department must
determine the source of the financials. A various funding could be received through
such as stocks, bank loans or bonds etc. There shall be an appropriate balance for
funds for spending and receiving. Companies may have loans at lowest interest rates
as possible.
Procedure of using finance: Finance managers need to make the most of
their finances. They have to use profitable funds and not to waste company money.
Also deciding on investigation shall be cautious, especially funds in other projects. It
can be critical to not fix company funds in inventor, and should only have a short term
of credit period.
Maintaining cash flow: Cash flow is a short-term investigation of financial
management. Companies may require to have a system of cash flow to pay for daily
expenses such as purchasing raw materials, and salaries, rent fees, and more. There
are many opportunities, such as receiving discounts in purchasing, or crediting
customers. Find a way of reducing expenses are survival in business and success of
the company.
Company survival: Most critical point of financial management is to have
competitive strong point of their own skills. Financial managers may to be careful
while have decision makings. One decision may take changes and risks.
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Reserve creation: Create a reserve may support financial management.
Distributing all profits as dividends to shareholders may not be a must or a required
strategy. It is necessary to maintain profits as part of the reserve. Reserves can support
in growth for the future for expansion. In the future, we may face unexpected
situations, therefore it shall be prevented.
Coordination: Coordination between all departments is necessary especially
for making a financial statement as it can be their face of the company, therefore if
financial department requests any information, it shall be transparent and have all
records being audited. Even the future plan of the company strategy shall be informed
to financial department if requested.
Create Goodwill: Financial management can create the image and reputation
of the company providing financial statement, as it is the easiest way to check their
company especially for investors. Goodwill may support to maintain the company in
the short and the long term.
Improve efficiency: To improve the efficiency of all parts of the company.
By properly allocating finance across all departments, the efficiency of whole general
improvement.
Financial discipline: Financial discipline (1) Invest with high productivity.
This gives the company a high return (profit), (2) To avoid wasting money and misuse
of finances.
Capital cost reduction: Financial management attempts to reduce capital
cost. In other words, company attempts to have a loan at low interest rates.
Financially it is required to plan the structure to minimize the cost of capital.
Operational risk mitigation: The financial management department is also
working to mitigate operational risk. Businesses have many risks and uncertainties.
Financial managers need to take steps to mitigate these risks.
Preparation of capital structure: This determines the ratio of how much
owned and borrowed for funds. This balance will create a record of capital sources,
and necessary for liquidity, flexibility, and stability in economic system.
In order to have a better understanding of the role for financial managers and
department, their functions are critical to review, it could be a important key to track
the changing the function of finance as a discipline. At the beginning of century,
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corporate finance was as an independent research area, but before that it was mainly
considered as part of economics.
Capital blocks, large incomes and equity are in every circumstances. Also,
the establishment, mergers, mergers, etc. of the new company required regulation on
financial records, and the development innovation and new industry in 1920 raised
awareness about liquidity and funding. Considerable attention has been connected to
describing a number of methods of external and internal funding. Mildenberg and
Hurter (1985) states that business companies were creating in “common stock” for
funding source, which is a new idea of funding in 1920.
In funding research on the defensive aspects of survival, attention was paid
to maintaining liquidity, bankruptcy, clearing and restructuring. Conservatism was
considered important, and companies began to maintain a structure for finance.
Finance was running traditionally that developed from the twenties to the
thirties during the forties. In this approach, companies were analyzed not from the
insider's point of view but from the investor's or lender's opinion. However, in cash
flows while being analyzed, the planning and management of cash flows from within,
evolved during this period.
Finance is certainly a critical point, however also it is considered as a
difficult key point of predicting what will happen in the future including numbers for
handling cash flow. As finance creating numbers and stabilize the cash flow, this may
support a great success, however it is also has to be a long term study for their
company even with clear confident that any decision could be succeed. Decision
making can be difficult as there shall be no 100% correct answer.
Development of financial management
Schuckett and Mock (1979), demonstrates that financial management needs
to have a change in years. Meaning, only the traditional strategy emphasizes external
funding. Over the decades, the focus has shifted from funding to asset management as
investor demand has increased. This demand has led to the improvement of a number
of analytical systems to determine the effectiveness of management.
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The convenient procurement of the allocation of funds may separate into
two critical divisions of financial management, and were taken care of by various
individuals of SMEs and large companies for better achievement of them.
With the development of financial management, the Ministry of Finance for
financing including tax matters, cash management, insurance processes, and the
management of lending and collection, and independent including accounting, and
procedures, planning and cost control.
Related researches
A related study that supports this is the “budget study: three theoretical
aspects and criteria for selective integration” written by MacIntosh and Hopper
(2005). This research focuses on budgeting being most widely studied topics
especially in accounting, and is also study relate to a theoretical understanding and
point of view in sociology and psychology as well. The reason for choosing this case
study as a related study is that those theories are the main research subject, level of
analysis, predictions relate to equilibrium, rationality and important similarities and
differences between budgeting and non-budgeting Focusing on the three theoretical
viewpoints.
This study describes the factors of an economic perspective that can be
considered how to incorporate psychological expressions about how budgets affect
individuals. Economics also states that it can realize the process of organization and
able to consider sociologically including restrictions whether supervisors should start
budgeting.
This study contains a psychological perspective on budget, which may
support this present independence. This survey can draw clear conclusions, especially
including the psychological factors of budgeting, to determine how a business can
influence the psychological case.
This related study states that there are three stages of the impact of
budgeting practices that can be characterized as follows: The first two phases-
individual mental state, behavior and performance (budgeting → mental state →
behavior → performance etc). This study shows how human behavior and its
understanding are important for budgeting.
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Also would like to note that participatory budget-based incentives reduce a
rate of employees stress, however if the company is having difficulties with budgets,
this may increase employees stress rapidly which may lead working performance to
be not effective. Employees may development their performance by providing trust
and justice from the company that can stimulate employee efforts, in addition efforts
to be constantly checked and implemented through incentive contracts (Organ, 1988;
Podsakoff, Mackenzie, & Podsakof, 2000). This research may demonstrate that
providing incentives is one of the strategies to be used and that it is supported by
qualitative studies.
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CHAPTER 3
RESEARCH METHODOLOGY
To conduct this research, the researcher identifies the research
methodology in the following;
1. Research design
2. Research methodology
3. Population and sample size
4. Research instruments
5. Data collection
6. Data analysis
Research design
This study is based on qualitative and quantitative methods. The reason for
including both methods is to conduct academic interviews with management levels
and use scholarly research to obtain various opinions that are considered as accurate
results.
Qualitative research design
This research is self-designed interviews to have information from the
respondents, it could be flexible and a quick way to derive and collect information.
Researchers used interviews in this study because this information cannot be
quantified and interviews are occasionally expressed as qualitatively of study. These
techniques of sample may provide the detailed information where is it required of the
study. The information and answers obtained from questions to determine whether
ABCHI's budget and budget management currently managing efficiently.
This survey discusses budgetary objectives and why it is important to
monitor the cost of doing business. The research approach is qualitative and
quantitative.
Grove, Burns, and Ihlenfeld (2007) describe the qualitative method a
“systematic subjective approach used to describe life experiences and situations.”
Parahoo (1997) states that qualitative research not only focusing on humans past
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experiences but also emphasizes their individuality of the individual. Holloway and
Wheeler (2002) describes that qualitative method could be connected to social
research which focuses on interpretation and understand their experiences and their
lifestyle.
Researcher use a qualitative research to empathize people’s behavior, each
person’s point of view, experiences and emotions, also concept of perspective factors.
A humanitarian perspective and point of view for understanding human experiences
without focusing on concrete concepts of standard (Morse & Field, 1994).
The researcher focused on the experience from the point of the participants.
The purpose was to achieve to have their point of view, researcher was involved in
research and were devoted. The participation of researchers in research has made
information collection more unique (Carpenter, 1999). However, in cases, a full of
analyzed information is not possible, and the qualitative method cannot be perfectly
accurate, as humans may not think logically or predictably based on every person’s
education or their perspective, also including emotions, may not be able to be
predictable always (Holloway & Wheeler, 2002).
Quantitative research design
The purpose of quantitative studies is to clarify the connection between
independent variables and dependent variables. A quantitative study design could be
descriptive (a single measurement) or experimental (subject measured before). In
studies, the association between variables is established.
A high participation rate from randomly selected samples from the
population, then it is a less chance of possibly that bias in relationship estimates will
occur. In this research, bias is less possibly to occur when cases are assigned to join
the interview randomly, or when researchers are blinded to each of participants of
research.
In studies, characteristics may a critical point and effective case for the
relationships. Limit the impact by using less heterogeneous subject samples or
including in the analysis. To measure variables to explain the treatment mechanism in
the experiment could be important.
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Research methodology
The difference of between quantitative and qualitative methods is method of
measurement. In general, quantitative methods are not very flexible. As an example,
in a quantitative method such as a questionnaire or questionnaire, researchers may use
the exact same questions to all participants. Participants may select as “closed end”.
The beneficial thing of this method is that responses able to compare significant
between participants and research. However, this may need an in-depth of
understanding of what questions to use, or what will be the most efficient way to ask
participants, including the possible range of what will be their responses.
Qualitative methods to be more flexible as it is able to greater autonomy and
able to easily interact between interviewees and participants. For example, in the
qualitative method, there are mainly “free answer” each participant can respond how
they want and provide their own opinions, it is free to talk and no limited of their
voice.
Furthermore, in qualitative methods, the relationship between researchers
and participants is tend to be casual than quantitative research. Interviewers
commonly have a chance to talk causally and to be more detailed than with
quantitative methods. The researcher then able to respond appropriately to the
participant's remarks by aligning suitable questions with the provided information by
the participant.
However, it should be noted that perhaps there could be a wide range of
different information between quantitative and qualitative methods. The flexibility
may not indicate the strength of scientifically methods, which to be critical especially
in researches. However, the study of flexibility may imply some understanding of the
issues being pursued using this method.
Qualitative methods
A draft self-designed interview questionnaires were provided to participants
of the company’s top management personnel to solicit feedback on in-house
budgeting and control issues and concerns. The results of this study show that an
appropriate budgeting and budgeting system has been adopted and used to prepare the
company’s budget, but also reveals some issues related to ethical issues became. The
results demonstrated that the system is required to have a basic procedure to allow
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management to plan ahead in order to promote the efficient use of limited resources
within the company.
Qualitative research means emphasizing the quality of an entity, as well as
the process that has not been experimentally considered or measured, when the
meaning has not been measured at all. Qualitative researcher provides the nature of
socially built situation, the links between researchers and research objects, and the
contextual constraints inquiry.
The strength of qualitative research may able to provide complexity
descriptions of humans experience with a particular of study subject. Information
regards to the “human” with problem could be a contradictory behavior, opinions, and
personal social interaction relationship. Qualitative methods could be effective for
identifying factors such of social norms, sociological, gender studies, ethnicities,
religions and etc. Used in combination of quantitative and qualitative methods may
support interpreting of the meaning of complexity of reality and quantitative data in a
given situation. Survey results from qualitative data to be explore in depth of research
in order to understand people with characteristics of the research population, however
deepen complexity of understanding with only a certain social background or
education. In this case, qualitative method is could be possibly different from
scientific research.
Possible advantage of qualitative research could not be forced to limited
from fixed answers such as quantitative research, however by using opened questions
and probing, participants can use their own words and provide opportunity to answer.
For open-ended questions, you can invoke the following answers:
1. Be meaningful and culturally distinctive for the participants
2. Any unexpected results
3. Descriptive casually
Another possible advantage for qualitative method that for researchers the
flexibility to investigate the first participant’s responses, that is, why and how.
Researchers listen carefully to the participants’ comments, participate according to
their individuality and style, and use probes to explain the responses in detail.
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Possible most common qualitative research described in each modules of
participants for investigation, detailed interviews for each participants. Different
methods are suitable for acquiring detailed types of research.
1. Interviewers observations are good in gathering information on
spontaneous behavior in normal context.
2. In-depth interviews are great for gathering information about an
individual’s personal history, different opinions, and experience.
3. Participants may suitable in extracting information especially relate to
different cultures, experience and extracting a wide overview of the concerns for the
cultural groups and subgroups being represented.
Therefore, in this case, conducting the data for qualitative research will be
done through in-depth interviews. The qualitative method chosen will be conducting
an interview with each top manager, including AMD (Financial Director), AMD
(Planning Director), Project manager, and Marketing director. The types of data
generated are field notes, and transcripts.
Questions for the interview will be the same for all interviewees, and
interviews will be conducted as equally as possible. There will be no different
concepts of conducting an interview to make sure that everything shall be the same as
much as possible.
Quantitative methods
Calculation of estimated and actual cost will be provided as below;
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Figure 6 Estimated and actual operation cost from 2015-2017 (Quarter basis)
Figure 6 is a sample of operation cost analysis that will be used.
For figure 6, details will be broken down as shown in the next page of the table, and
will all be input in the results section. Total results will be available in the results
section.
% of Income APR MAY JUN JUL AUG SEP OCT NOV DEC
Direct Material
SUB TOTAL
Consumables
SUB TOTAL
Labor
SUB TOTAL
Services & Rentals
SUB TOTAL
Transportation
SUB TOTAL
Overhead and Cost (Share)
SUB TOTAL
ESTIMATED COST ORG.
TOTAL OPERATION COST
Income
Cost
DescriptionEstimated cost (A)
ACTUAL
Q2.2015 Q3.2015 Q4.2015
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Table 2 Breakdowns of task of activity for costing
No Description
1 COGS
2 Direct material
3 Cost estimate
4 Supplies
5 Material supplies
6 Galvanized cost
7 Grating cost
8 Import exp.
9 Stamp duty
10 Freight charge
11 Customs clearance
12 Consumable
13 Consumables
14 Tools @ Equipment
15 Consumable-gas
16 Consumable-painting
17 Consumable-welding
18 Labour
19 Salary & labour
20 Subcontract
21 Subcontract-local
22 Subcontract-oversea
23 Subcontract-other
24 Service & rental
25 Gasoline-company
26 Services third party (testing, NDT, inspection)
27 Services-machine, gal, grating, rubber lining
28 Services-other
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Table 2 (Continued)
No Description
29 Maintenance
30 Drawings design
31 Rental-equipment
32 Rental-machine
33 Repairing
34 Transportation
35 Transportation
36 Transport
37 Overhead and cost (share)
38 Bonus
39 Electricity
40 Overtime (staff)
41 Overtime (worker)
42 Compensation (worker)
43 Service-calibration
44 Cost share
45 Total
Qualitative and quantitative research
Population is approximately 1,200 involving this project, and sample size is
4 for qualitative research as well due to only top management to take interviews.
Research instruments includes such as, recording system of accounting from
company’s confidential computers, also permission of access system by directors,
hard copies of each year of financial statements were also being used.
This study uses both qualitative and quantitative methods. Quality research
is conducted through in-depth interviews with management. While discussing this
topic with top management, we will discuss possible reasons and solutions for the
possible difference between budgeted costs and actual costs. The interviewer will
draft possible questions and try to get different opinions and answers about the actual
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difference between budgeted costs and actual costs. You can receive different
opinions by getting opinions from different ranges of management. For example, the
Finance Director focuses on numbers and financial statements, and the Project
Manager focuses on construction management. Therefore, the scope of management
may differ and the prospects may differ, which provides a broad view of qualitative
research results.
Both of the above methods are limited to the number of populations, or
samples of size. The population is limited to managers and directors. The aim is to
receive only top management perspectives on budget management from their own
perspective, not lower level officers, depending on the level of experience. In
addition, because the issue of confidentiality limits access to other companies, the
sample focuses on accounting cost records from one sample company that is ABCHI.
However, as ABCHI provides in-depth interviews and accounting cost records, this
may apply to business development, especially budget control, as a future reference.
Quantitative and qualitative research methods differ primarily in:
1. Their analytical purpose.
2. The types of questions they propose.
3. Types of data collection equipment used.
4. The format of the data produces.
5. Degree of flexibility incorporated into trial design.
Qualitative method
The instrument qualitative method is completing an interview with
interviewees who are the management level, face to face interviews been done, draft
questionnaires were provided before starting an interview in order to prepare in
advance, atmosphere was not too formal, tried to be causal as much as we can to
discuss freely and there was no time limit, however, due to their schedule times, it
was up to their available to time to spend to doing interviews, however all
interviewees were able to complete all questions and answers.
Northern Illinois University says, “Data analysis is the process of
systematically applying statistical and logical methods to explain, illustrate,
summarize, summarize and evaluate data.” The data collected by persons are
classified as analysis and different sections primarily in certain form.
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As already mentioned in the previous chapter 1, the qualitative method will
be employed in conducting an interview with each member of top management,
including AMD (Finance), AMD (Project), and Project Manager. Different types of
information collection methodology generated are hand notes, and transcripts.
Draft questions will be used for the all interviewees and each different
answer will be recorded and will be input in the analysis.
This chapter discusses the information to be collected and to be analyzed.
The aim of this research is to identifying the system of cost control in ABCHI,
including how to assess the draft budgets to be made and prepared, with clarifying
and how many manpower available in order to implement the budgets, also, fine the
measurement to control with variances of company budget.
Quantitative method
The instrument of quantitative method includes a number equipment such as
computers, accessing system, approval by directors to review, hard copies were also
used, also involving with accounting team by discussing each quarter of results were
one of strategies.
Cost management control has estimated and analyzed the possible
assumptions of this project. Actual spending records are also available, so you can
compare the differences to find out which ones have the most cost difference. This
makes it possible to calculate why there is a cost difference. This result may explain
why there is a difference and suggest ways to prevent significant differences in budget
calculation costs.
First of all, the format is given, then there are descriptions of each, and the
cost has been evaluated into the subtotal. Sections are such as that are all related to
completion of this off shore project.
Cost sections of assumptions are as follows:
1. Direct materials
2. Consumables
3. Labor
4. Subcontracts
5. Services & rentals
6. Transportation
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7. Overhead and costs (share)
8. Estimated original cost and total operation cost
Also, total income and cost will be available. The company trusts that the
above sections are the most important cases to record and are recorded according to
their strategy.
Additionally, for the above sections of divided descriptions, there are further
details of each section with a breakdown of details and sub sections showing how
each has been calculated.
For example, further breakdown details will be available for:
1. Direct materials
(Cost estimate, supplies, material supplies, galvanized cost, grating cost,
import expenses, stamp, duty, freight charge, and custom clearance)
2. Consumables
(Consumables, tools, equipment, gas, painting and welding)
3. Labor
(Salary & labor)
4. Subcontract
(Subcontract – local, sub contract – overseas, subcontract – other)
5. Services & rentals
(Gasoline – company, services – third party (testing NDT, inspection),
machine, grating, rubber lining, maintenance, drawings design, rental equipment,
rental machine, repairing, and rental tent)
6. Transportation
(Transportation)
7. Overhead and cost (share)
(Bonus, electricity, overtime (staff), service – calibration, cost share)
8. Estimated cost original cost and total operation cost
Cost has been analyzed by quarter from 2015 Q1 to 2017 Q4. Results will be
available in Chapter 4 and will be discussed further.
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Population and sample size
Qualitative method
Population for this study is 4, there are company ABCHI’s only top
management’s completed interviews in order to provide their own experience and
personal perspective from each different department.
Sample size is also 4, due to there are a limited management level of
position in the company, however, 4 directors are the main interviewees who are
directly involving in every project and especially for 03B.
Quantitative method
Population for this study is 20, who are the main staffs were able to make
financial statement and calculate the actual cost of numbers.
Sample size of study is the same amount of population that is 20.
Research instruments
Qualitative method
The research instrument is to bring a note and a pen to discuss, and
interviewees were received a draft questions in prior for the interview in order to
management level of interviewees to arrange time and able to prepare answers. It was
conducted through comparing financial previous and current statements quarter by
quarter with accounting department, the number of breakdown cost been created from
the record of project’s report and actual account receiving cost.
The interview questions comprise of 4 parts.
Part 1: Business Analysis and Budgetary includes 6 questions
Part 2: Cost control includes 5 questions
Part 3: Management strategy includes 4 questions
Part 4: Debriefing include 2 questions
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Quantitative method
The research instrument is used via computers, hard copies and face to face
discussion, due to confidentiality, it was not able to receive all documents however
company confirmed that the numbers are correct.
Data collection
For general data collection of method for qualitative are considered as doing
interviews. A draft transcript and questionnaire clarifies each information in detail,
especially on how it actually works when each method is used properly. Examples of
studies focusing on interviews and interviewees are also provided. The important
point is that interviews are generally to be used for the purpose of data collection.
Interviews may able to explore individual participant perspectives, experiences, their
norms, and encouragement. Interviewers attempt to be causal conversation to generate
qualitative data easily rather than being too formal.
There may have a number of basic types for interviews, such as structured,
semi-structured and unstructured. Structured interviews are usually orally done with
questionnaires and answers, where the scope of follow-up questions for answers
justifying further scrutiny, with little or no change in the list of predefined questions
asked without. Therefore, it may able to save time and easy to complete, and are
especially useful if you need clarification of a particular question or if the respondent
is likely to have reading and writing problems. However, due to the nature of their
responses, participants' responses are limited, so they are of little use when you need
‘depth’.
However, unstructured interviews may not reflect prejudice theory or studies
that are poorly organized at all. Such interviews can begin with just the first question,
“Can you tell us about your experience,” and then progressively increase questions
based primarily on the first answer. Unstructured interviews may take a lot of time
consuming taking several hours and complicate to control and to attend as there a lack
of guidance to discuss about as there are no pre-determined interview questions it may
be.
Semi-structured interviews may include a number of important questions to
determine the area of being surveyed, however also allow interviewers or
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interviewees to explore their ideas or responses with detail. This interview research is
considered generally about offshore projects to provide their perspectives and
opinions with guidance on what to discuss about with draft questionnaires. The
flexibility of this research is to discover information that is critical to the interviewees
however, may not have been considered appropriate by the researcher, especially
compared to structured interviews.
In this qualitative survey, the survey interview is aimed at semi-structured
and structured. Business executives generally prefer to have some conceptual drafts
and an understanding of what kind of questions to ask. Therefore, in this paper we
tried to use a more semi-structured structured concept.
Researchers personally conducted a questionnaire with ABCHI’s top
management through oral interviews. During the interview, the interview got
information and feedback. As a whole, it took about three weeks to distribute and
collect interview questionnaires from each person and to schedule an interview
schedule. This survey is considered complete and takes 1-2 months after all the
necessary information has been obtained and edited.
Data analysis
Variable analysis with accounts set from 2015 to 2017 on a quarterly basis
will also be provided in the results, including direct materials (cost estimate, supplies,
material supplies, galvanized cost, grating cost, import expense, stamp and duty,
freight charge, and custom clearance), consumables (tools, gas, painting and welding),
labour (salary and labour), subcontracting (local, overseas and others), services and
rentals (gasoline, third party services (testing and inspection), machine, maintenance,
drawings, design, transportation, and lastly, overhead cost (share) related such as
bonuses, electricity, overtime (staff), service and cost share. These items will be
provided with the number of costs, which will be able to identity which are the most
critical costs to monitor, and will be able to check generally for the cost impact in
detail.
Variable analysis is important because it can measure the importance of
variables in computational models and measure data in many applications. Almost all
business decisions require cost-benefit analysis. Such analysis may able to figure out
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possible future risks and prevention of a decision making. If an organization not make
a performance of doing a cost control analysis, it may have possible issues of taking a
loss profit work and also loss time and cost. Predicting and prevent any potential risks
of decision based on cost analysis may prevent business failure.
Cost-benefit analysis can be widely used and understood, it is worth of a
single intervention of judges, also this analysis may able to compare interventions
within and across sectors and compare interventions with multiple outcomes, however
it is important to be noted that cost benefit analysis cannot deal with non-monetary
outcomes. It is conversion to benefits require assumptions.
Information for cost control may receive based on cost-benefit analysis
facilitates budgeting. If a company has the lists of costs analyzing, it is able to
forecast the future budget in order to carry out their business. If the company plans to
quantify financial achievement, the company may use the expected profit for your
sales forecast. Any possible predictions can be useful when creating budgets and
forecast of cost control (Thompson, 2019).
Cost-benefit analysis is assessing the planned behavior evaluating the cost
versus that benefits for the project. This may begin with a list of draft of plan and cost
planning. The difference between the benefits and cost may able to determine if their
business decision making is warranted or not. Generally, if the cost is 50 percent of
the benefits, then it is to be predicted to worth taking it. The purpose of cost benefit
analysis is to approach to measure the suitable path for the project including
investment, or business requirement etc. Cost benefits analysis may provide options
and able to study which can be the most possible less risks decision or worth profit.
Decision makings can be made based on cost-benefit analysis include their
new cost assumptions such as applying new technologies, new procedures,
remodeling, and purchasing new equipment or relocate some facilities. To monitor or
assess applying those cost-benefit analysis, it may involve related to savings, or
administrative time, facility space, etc. and associated cost avoidance (future work
such as overtime work or equipment leases) Cost reduction) opportunity.
While the name looks simple, the actual cost-benefit analysis
implementation often has some complexity and subjectivity. This may not all relate to
cost analysis at initial investigation. Considering that if the company wants to make a
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decision to manufacture or purchase a particular component of a complete large sector
of assembly, there may require a review for the price numbers to make sure whether
the company can go ahead parts to purchase to be manufactured.
When subcomponent production is included with an external supplier, fixed
overhead costs reduce the number of components that can be decentralized, as the
utilization of their own plants is reduced. In resulting, different parts may manufacture
constantly and demonstrate increasing costs and consume, or perhaps other benefits as
well.
Labors might to be concerned with the outsourcing job. The resulting issues
of morality and labor without rest may cost the company much earlier than planned.
The impact of loss control on subcomponents needs to be considered. When
parts are belonging from outsourcing, the company may have no direct control over
the product.
Unexpected profits could be achieved, such as factory facility that was
standing by for a long period was able to be used depends on project’s requirement,
which allows the company to be more productive and able to assemble or able to
create further products.
To be comprehensive, demonstrate the spillovers that occur in changes for
the actual business environment. Cost-benefit analysts require to check possible
interactions between the action being considered and other events to assess any
possible risks. One of possible factor is the accuracy for the benefit cost analysis to
generate useful data in order to make proper decision making for business.
The value of time is a main significant point concept in cost-benefit analysis.
Receiving amount of current value of money could be more valuable than receiving
the same amount in the future, due to unpredictable or unexpected future results in
cost control. The difference of current value and the future value is critical if the cost-
benefit analysis is to exactly able to quantify the financial statement and cost control.
Capital budgeting is a analysis for cost control that brings the proper
assessment of costs and analysis over a long term period, thus providing more
consideration of the value the time of investigation. Annually, inputs and outputs of
investment of the results shall be monitored, and can be related to the present value in
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order to check whether the net present value could be an opportunity to improve for
the future decision making for their organization.
Cost-benefit analysis is a multistep strategy that connects to preliminary
surveys, and reports. Every last steps, it is responsible for make the analysis to
provide a proper decision making or prevent any possible risks. The survey could be
an evaluation which relates to collecting data for the possibility of chances and the
current value. Feasibility studies complete data collecting as required and evaluate
information to assess impact of the opportunity in a long or a short term of period. In
final, an analysis report may able to provide all relevant document and data for
decision making for opportunity. Benefit analysis may summaries and referrals.
Possible suggestions with legitimacy. And points related to implementation of
business.
Cost-benefit analysis may support decision making and answer possible
questions that begins with “what if” or “should we.” Also, a mathematical solution
may quantify the benefits of risks as well. It is one of strong beneficial methods that
to be used and analyze the potential profit impact of the business, such as purchasing
equipment, expanding facilities, or outsourcing tasks or subcontracts for the current
ongoing project. Company may feel convinced of benefit from the action taken is
greater than the cost of carrying out that action provide it much easier to determine
the progression.
In order to have a final results of conclusion for the current project relate to
cost control, all aspects of the possible issues require to be found in a common sector.
In other words, there must have a "bottom line". Possible common section could be
considered as money. This means that all margins or profits and costs of the project to
be quantified with price. The strategy may provide positive solution that are not
directly connected to cost, but there is cost that the beneficiaries of equivalent to the
benefit of the project. Meaning such as, in one project, elderly people in a certain area
can visit a doctor every month free of charge. The value of the benefit of beneficiary
could be considered as smallest amount that the beneficiary takes.
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The assessment of cost analysis may reflected on how to choose the concept
of decision preferably. For example, improvement for transportation shall involve
how delivery time to be reduced, including cost saving as well. The value may not
simply consider about the time. The value of time shall be consider the public
revealing time decisions including the trade-off between time and cost saving. For an
example, if you choose to park at a rate of 50 cents or spend an additional 5 minutes
walking and choosing to save money and time and effort, you will find that the time
will be longer 10 cents per minute, it is worth more than that. If two options were not
consider the same, it may reveal the time value is just 10 cents per minute.
The resulting of increased profit in consumption is the sum of each marginal
profit and increased consumption. When the incremental increases, the sum rate
moves to under profit curve area, it is considered to be smaller and smaller. However,
the demand curve is considered to be equivalent to marginal profit, the area under the
demand curve is considered to be same as profit area being increased. As shown in
figure 7, the area is considered to be out of the range from the decreased and
increased limit of consumption.
If the increased consumption is a small number or area compared to the
whole total consumption, then the gross profit is likely effected to the market value of
Figure 7 Gross benefits that is increasing in consumption under the demand curve
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the increased consumption, as shown in analysis. Which means, market price
multiplied by the increase in consumption.
It is critical not only estimate the situation of project, but also evaluate and
analysis any possible assumptions.
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CHAPTER 4
RESULTS
Qualitative results
Interview with AMD (Financial Director), AMD (Planning Director),
Project Manager, and Marketing Director.
Answers were given from the person in charge of each department. AMD
(Financial Director, Chanchira Smakthai), Marketing Director (Dave Dargan), AMD
(Planning Director, S. J. Lee), and Project Manager (Peter Jorn).
AMD (Financial Director): Ms. Chanchira Smakthai, is an original member
of BJCHI who has worked at BJCH for more than 20 years. She managed to develop
the company in a financial way, was a Financial Director and Assisted Chairman K.Y.
Lee. She is one of most important of the directors who can manage Thai employees.
Marketing Director: Dave Dargan is one of our important Marketing
Directors, who always looks for potential jobs and projects. He is also aware of the
project's on going system. Dave Dargan managed our previous Australian Projects for
the past 5 years. He was also a Project Manager for BJCHI’s Australian Projects.
AMD (Planning Director): S. J. Lee has been a Project Manager for the past
10 years and knows a lot about project concepts of ongoing and process. He is
important for managing Korean employees and providing critical advises for current
projects. He is also involved in the Estimation Department to make sure BJCHI
submits the correct quotation.
Project Manager: Peter Jorn is a current Project Manager who has
professional experience at managing a number of modularization projects. He is
capable of managing manpower, pre-commissioning, structure, piping, valves and
E&I parts as well as being aware of how to complete both on-shore and off-shore
projects without any technical issues. He also has a variety of experience in
marketing, procurement, and planning so he knows how to manage cost controlling.
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Questions are as below:
1. Business analysis and budgetary
1.1 What do you think are the tools to be considered as the most
important for business analysis for cost investigation? (Smakthai, personal
communication, May 10, 2018).
1.2 What are the most critical points for a business analyst to consider
when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
1.3 Where do you see a business analyst to be suitable into an
organization? (Dargan, personal communication, May 10, 2018).
1.4 What are the recommendations or suggestions for analyzing the
implications of budget for projects? (Lee, personal communication, May 10, 2018).
1.5 Which sector would be the search area in terms of business
development related to budgetary analysis? (Sawhill & Williamson, 2001).
1.6 Why do you think the key strengths of budgetary control is related to
business analysis? (Lee, personal communication, May 10, 2018).
2. Cost control
2.1 Why do you think there are different results of control after seeing
the results? (Agu, 2006).
2.2 What do you think are possible ways to make sure we can maintain
the same budget in theory and reality? (Sawhill & Williamson, 2001).
2.3 What techniques modelling, and methodologies do you think is the
most useful strategy and why? (Robinson & Last, 2009).
2.4 When is the most challenging period for handling the budget? And
what are your suggestions? (Smakthai, personal communication, May 10, 2018).
2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins? (Sawhill & Williamson, 2001).
3. Management strategy
3.1 What management strategy do you think is most considerable strategy
in your company for budgetary cost? (Agu, 2006).
3.2 How do you think the company should prevent over-spending the
planned budget, and what are the possible solutions? (Sawhill & Williamson, 2001).
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3.3 The budgetary will also effect the financial statement, which will
influence stakeholders’ investment decision making. How do you think the company
can persuade stakeholders or deal with a difficult stakeholder? (Hansen et al., 2003).
3.4 How do you think you can establish credibility with management?
Why would you think credibility is important? (Agu, 2006).
In depth-interview Q & A
1. Business analysis and budget
1.1 Which tools do you consider as the most important for business
analysis for cost investigation? (Smakthai, personal communication, May 10, 2018).
AMD (Financial Director): Recording is critical, the need to be organized
well and record properly, analysts need to analyze well -- that is their job and making
a decision is our job. In order to make decisions by the board of directors, information
is critical, therefore analyzing all the numbers, how much we spent, and how much
we made margins, using tools such as graphs, numbers, excel sheets or any are
essential. Cost investigation is really all about numbers.
Marketing Director: The most important factor is for the business analysts
to have practical experience. Business analysis is very critical especially for project
implementation, this job is involving testing and improvement. For example for
development involves modeling of internal business processes and data flow,
clarifying each factors that could affect their business performance, and draft
inspection plans. If they have no experience, I don’t think it is possible for the
company to have any properly analyzed results, so hiring someone who has practical
experience is better than training them.
AMD (Planning Director): Experience is important so sometimes analysts
can also give their ideas and opinions. Business analysis support for communication
as well especially for complicated technical issues to explain easier to stakeholders,
and for management level. A project manager should be able to also coordinate with
business analysis to make sure how cost saving has been made during the project or
will be made for the future wise and understand the whole concept of the project how
to control the budget. This is very critical because project manager needs to be able to
explain the organization chart and explain the technical details to business analysis for
management level to be informed properly. For example, a new quality control system
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has been implemented to the new project, this could effect the data record functions
for accounting, meaning project managers need to check every technical details to
manage their new implementations. This is why installing a new system is a big
challenge.
Project Manager: Follow up basis is important, this means analysts need
to make sure of all details and information to not to miss anything, and to summarize
well. Business analysis do a lot of important roles especially for project
implementation, and their job helps management to have a decision making, it is
important that business analysis organize proper information, previous record, all
required documents to be able to provide so management can decide what to do for
the next business plan, for example, I believe that business analysis could prepare
modeling and flow data, find critical components that could effect on business
performance, may be they could identify with cost, if the company lost margin in
which part, then able to find issues and able to investigate.
1.2 What are the most critical points for a business analyst to consider
when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
AMD (Financial Director): Try to avoid showing repetitive things, look at
the negative plans that we experienced and give positive suggestions. The business
analysis helps to find the main problem of which data to check for management.
Make better and faster business decisions with the power of business analytics and
gain rich experience of your business with data analysis dashboard. No matter what
your business is, the data analytics technology helps every enterprise to measure and
achieve their desired goals. This analytics approach also support to prevent any
problems that can be occurred in the future and able to be aware of any business
challenges without relying on only information technology. Gain new approaches of
business analytics to take the data driven decisions within a short period of time with
voice and search enabled analytics methods. This technique gives excellent results in
analyzing small or huge amounts of data quickly with search terms. No need to waste
time on analyzing all data, instead you can easily search and build reports without
wasting a huge amount of time. The real-time data visualization is useful in the desired
charts graph and maps.
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Marketing Director: The business analyst must review previous business
plans and identify what actions in the previous plans were not positive. On identifying
the negative previous plans he must assess the reasons ie. Was it employees:
Management: Project Control: Costing? His new business plan will be prepared
including the corrective action needed on the previous plans. The adoption of
advanced analytics like voice and search-based features, with real-time visualization,
predictive, and time saving, is considerably higher. The same applies for data
management technologies as well. Continuous advancement in data analytics are
considered an imperative for nurturing business transformation and innovation into a
customer-centric one. Voice and search-based analytics bring deeper insights into
business and help to run the business as a successful one.
AMD (Planning Director): Look at the past experience, compare the
numbers. Additionally changed orders are important, we need to make sure whether
this shall be considered and how we can respond later. Business analysis is having a
critical understanding of the revenue drivers for a company. Business analysis also
helps companies carve out targets to help them achieve near and long-term goals. If
you want to develop your business, you are building your own business, your clients
aren’t happy with your services or product and you need to revamp, there are holes in
your company processes and you are trying to understand how to better integrate
systems to help streamline, retention is low and you want to keep your best employees
happy -- all of these things (the list is endless) can be fixed with the help of business
analysis. You can hire a Business Analyst full time or part time to help you with your
various business needs. Business Analysts are objective and present the facts to you
with actions to get better.
Project Manager: Without monitoring, you cannot measure…without
measuring you cannot control…Without controlling you cannot give a direction to
it…Without giving a direction you cannot see the progress…so you call in the
analysis, which involves of managing, monitoring, investigating, and planning, these
are important for the keys of the business. Depends on the objective and capacity
there tools, people available to compliment you to fast forward the growth of the
business. Business analysts need to work with the planning team and record all the
numbers that we spent, then check the budget that we made from the beginning. We
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need to check and compare why they matched or did not. Business plan needs to be
solid but very detailed. A business analyst handles some of the crucial parts of a
successful project.
1.3 Where do you see a business analyst to be suitable into an
organization? (Dargan, personal communication, May 10, 2018).
AMD (Financial Director): actually business analysts need to contact with
every department, and need to request all the information they need. Business analysts
need to be the center of the tower for budgeting and for the future management.
Business development, also called pre-sales, is all the front-end work that gets done
before money changes hands. Business analysis is obligated to provide solutions or
possible change for organization, this considers as their main job and include a lot of
theories and comparing past projects results are being used, and the main approach is
to make profit for changes and solutions. Business analysis clarifies any issues and
discover the best solution. In addition, they also need to make sure how to convince
stakeholders for investment. Supporting development of organization’s goals are to be
critical role for them.
Marketing Director: The business analyst must be in a position to
constantly monitor his plan against actual operations. Development is not only
important in business, it is important in almost all aspects of life. If we talk about
business development, in this era developing a business now totally depends on how
much you are visible in the digital world and for that we need proper visibility
through business operations. (1) Developing a structure of website addresses on your
site in the target language, (2) Notifying the search engine which particular sub-pages
are available, (3) Analysing keywords for each language, (4) Acquiring external links
leading to your website, (5) Regularly creating interesting, professional content.
A well-thought-out strategy of developing your business on foreign
markets, combined with technical expansion of the service and building
communication based on localization, especially in the long perspective.
AMD (Planning Director): I think business analysts should provide new
ideas and new information every day, and if management requests a plan, they need to
come up immediately with draft plans and ideas. Using initial data and modelling
could be reference for business analysis, this is to define for presentation or analysis
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model. Based on models, possibly it could be able to support on understanding issues
or any problems in their business. Before try to do something, actually this seems
really basic, but I think it is important think what you will be looking for, for example
‘what does company want?’, why business analysis is looking for this issue? Then
after have a questions or the concept of research, it will be much easier what to look
for. So in a company it could be important to make a scenario, how to solve any
issues, or defining potential are where to focus.
Project Manager: Business analysts should provide hypothetical plans,
document its business or systems. They need to know how to assess the business
model. Planning, monitoring, simplifying documents or assisting with the business
case etc. there are many, and in order to have all those requirements, they need to
know what management wants and what management wants to see.
1.4 What are your recommendations or suggestions for analyzing the
budget for projects? (Lee, personal communication, May 10, 2018; Dargan, personal
communication, May 10, 2018).
AMD (Financial Director): Look at the history and assess how we can do
better, also would like to mention about some of not reliable reports to be checked
properly. Sometimes there are unstable bills that company is paying constantly which
we need to clarify the issue if the spent cost is not stable, this refers to water bills,
fuels, or electricity bills etc.
Marketing Director: The project team then goes off and documents these
requirements in the requirements specification, and from that point on, most of the
dialogue about requirements is channeled through the project manager. Then, late in
the process, the users re-engage in acceptance testing, and start pointing out all the
areas where the application fails to comply with their expectations. Analyze properly
and record everything, also I look to the past, what our company has done and what
mistakes we made to avoid any duplicate mistakes in the future to repeat, or we can
change the system really but it will cost a lot and take a lot of time to do so, which
means as from the owner side, it will be a challenge and can be risky to spend a lot.
No technique guarantees a successful outcome, but following a specific technique in a
disciplined manner has three major advantages. First, if it is applied throughout the
process, it will tend to improve the consistency and coherence of the full requirements
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set and filter out extraneous and irrelevant requirements. Second, participation in
repeated requirements discussions that are run in a consistent manner according to the
chosen technique will lead users to adopt a similar discipline among themselves.
AMD (Planning Director): Cost monitoring, and apply same format for
every project. Also, controlling people is very important, currently I am checking the
inventory list and some of materials are actually not there but still our inventory list
says we have stock. One example is welding rods, we have so many welding rods in
the warehouse, and we did not even check why we purchased and why the project
team requested so many welding rods. There were many different opinions about this,
actually welding rods are difficult to estimate the exact quantity before the project,
because humans are using the welding rods, not robots, so each person uses them
differently with their own procedure, some people use more, some people use less. If
we used robots, then we can exactly estimate how much we may use for the project.
Anyhow, back to the point, for this kind of case, I realized we need a quantity
surveyor and make sure each person uses how much. Also we should make sure only
which suitable position or role can request any additional materials, so that means not
anyone such helpers can request for more materials, which shall not be acceptable. I
don’t think we need a quantity surveyor for every project or as a permanent job, I
consider case by case even though we pay high salary, I trust that this would work
better, and this was already discussed with financial AMD as well. We think we will
pay higher salary but higher case by case would be more suitable.
Project Manager: There should be the same information and instruction
for analyzing every project, such as using data model, analysis model and others.
From the beginning stage, it is necessary to define what the issues are. I think mostly,
understanding the problem is the first thing to keep it in your mind. For summarizing
any possible data, it requires format and follow procedure. Also, looking at the cost.
1.5 Which sector would be the search area in terms of business
development that is related to budgetary business analysis? (Sawhill & Williamson,
2001).
AMD (Financial Director): Seems a bit of a broad area, we need to
sometimes go with the flow or sometimes need to make a new decision that other
companies do not make. But the search area should be general; for example, if we are
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focusing on offshore projects, then we should keep looking for offshore general trends
and clients’ plans.
Marketing Director: Network and connections are important, we need to
know people and know how to get new information from them. We also need to keep
following up with news and articles on an everyday basis, but critically if you don’t
know anyone, you can’t get a job.
AMD (Planning Director): Search area would be news and newly signed
agreements with other companies and clients; for example, Petrobras recently
announced a partnership to complete the refinery at the Rio de Janeiro Petrochemical
Complex in Itaboraí (Comperj), one of the major symbols of the corruption scheme.
That existed in the company and that was revealed by operation car wash. In a
statement to the market, petrobras informed that it has signed a letter of intent with the
Chinese giant China National Petroleum Corporation International (CNPCI) to detail
the execution of joint projects that include the construction of a refinery in Comperj,
as well as the participation of the Chinese in fields of Marlim, in the Campos Basin.
Every kind of information, even if our company is not involved, we need to keep
researching and making sure how the business is going.
Project Manager: The searching area for internal basis, and cost
monitoring is essential. I would say indirect and net profit are important for business
development and also for the current situation. Following the trends and looking at the
world is also important, but we should also make sure that we need to look into the
details especially of our internal system. My opinion for business analysis is that, they
could be able to provide new system or ideas rather than only following procedure, if
company procedure should be developed, I think they can try to give their ideas and
make things better. It’s important that they raise a voice and also management needs
to listen. There is no stupid idea.
1.6 Why do you think the key strengths of budgetary control is related to
business analysis?
AMD (Financial Director): Most critically they need to know how to
assist with the business case. Looking at the budget, and providing proper plans and
advice, this shall be considered as a key strength.
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Marketing Director: A business analyst must have the following key
strengths; (1) Assess new areas of business for the company, (2) Identify new
opportunities with existing clients, (3) Minimise costs without affecting productivity,
(4) Maximise values for shareholders.
AMD (Planning Director): As I am looking at the numbers, my opinion is
to minimize the cost as much as we can with the same quality of work. It is an endless
dilemma that we always need to face up to. To make sure how to know what we are
doing, I think assessing every project with cost control is essential.
Project Manager: How to make production more efficient would be the
key point, because this means including everything basically. Efficiency would
include the cost, production, time schedule, and the net profit.
2. Cost control
2.1 Why do you think there are different results of control after having
seen the results? (Agu, 2006).
AMD (Financial Director): Due to different perspectives, or different
understandings of the concept, even if we always estimate both theoretical and real
budget to be the same, from past experience we know that it cannot always be the
same, and if it is the same, then that is something strange really. But main point is cost
controlling, we are not looking at the difference but looking at the control. We should
focus on the spending cost that should not be over the budget, that’s it. One advice is
that a project cost controller must keep track of ACTUAL cost expenditures on the
project and compare it to the BUDGET (usually on monthly basis) and report the
variance to the project management.
Marketing Director: Cost control is an internal plan by a company or
government agency to keep the costs of its services as low as possible. It would
include buying the lowest cost products to use and looking for and eliminating waste
and fraud. To some degree all companies and governments do it, as do many
individuals who do not like to waste money and live within their means. There will
always be different results between theoretical and real budgets if the individual does
not have costs related to a previous similar project.
AMD (Planning Director): Business is either subjected to profit or loss.
Any investment done by the management always thrives among the market to
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optimize its productivity and approaches to achieve profits. But there are times when
a certain condition does not support and market becomes too vicious. To undermine
such situations a firm has to take initiatives in order to reduce costs and make
adjustments in business. Perhaps it is the fault of the measure, which should not ever
happen, but we cannot make a budget 100% accurate, so this is why we put enough
margins on the net profit and indirect costs. If we try to make it the same or the less,
there will be risks.
Project Manager: Yes, there will be different results but the main factors
will be due to such as unexpected issues that happen that were out of agreement. For
example, who can expect while doing our jobs, that all of sudden a client requests
additional jobs; this request is out of our budget control. This is just only one
example, but what it means is that something that we cannot control will result in the
difference. Also, numbers can be only just numbers, while the project is ongoing, we
are actually working with people, so we cannot only just simply looking at the
numbers, we sometimes need to provide some benefits to encourage them to work if
the schedule is very tight. There are unexpected situations which occur every time,
and it is risky to only look at the budgetary control without considering people’s level
of motivation.
2.2 How do you think there are possible ways to prevent to make sure we
can achieve the same budget in theory and reality? (Sawhill & Williamson, 2001).
AMD (Financial Director): What I can think of is the cost monitoring, it
is critical that we need to keep monitoring how much we are spending while we are
doing the project on a weekly basis, and if there is a cost that is higher than we
expected, we would need to make a decision about how to reduce it. Costs are
associated with translating factors of production into outputs, i.e. land, labour, capital
etc. have to be turned into revenue generators. Costs are a function of output, and the
window for which the average costs of production decrease is called economies of
scale. Eventually, your average costs will escalate and you hit dis-economies of scale.
Also, when your product or service goes to market, it will have a
particular reception, which might be good, better or at par with your vision.
Eventually, it is easier to reduce costs and control them rather than generate fresh
revenue centers. This remains true for industries and services. There is also a trade-off
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to providing these services associated with products.
For instance, it might be profitable for a corporation to set up a system,
whilst it might not be possible or profitable to install and spend the costs because they
would be too high. Similarly, services might not run at a frequency similar to bigger
companies with high demand. A business, any business finds it easier to control or
track intrinsic variables such as costs of labour, raw materials, factors of production
rather than track extrinsic variables such as demand and customer switching.
Marketing Director: Projects must have all costs documented and the
Projects must be identified also, as for example
Type 1 – Mining conveyors and plant;
Type 2 – FPSOs;
Type 3 – Mining modules;
Type 4 – Tank fabrication etc.
Also, we may need to think about the employees and the system together,
and if those two things are combined well, the project could be completed
successfully and reduce the different costs of budget.
AMD (Planning Director): In order to protect the budget, even if we
spend over the budget, I don’t really think changing their job or role while continuing
the project is not a good idea. What we should consider is that just look at the last
digits, we don’t need to look at the details because that is what each department
manager will do, so how we should preserve on the management side, try not to
change, but only looking at the large final numbers. Actually trying to change the
internal system, especially while the project is on-going, is not could be a suitable
idea.
Project Manager: We need to look at the cost and progress, they should be
always be about the same or have a similar rate. If there is a big difference between
cost and progress, I can guarantee that there is a wrong calculation, so I think to
prevent, by the time, we should look at the rate of the progress and the cost. Cost
means when there is an issued slip, it does not count as an asset anymore.
2.3 What analysis and modeling techniques and methodologies have you
found be the most effective and why? (Robinson & Last, 2009).
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AMD (Financial Director): Each department requires different skills, for
example marketing should be active, we need to take action and discuss with clients,
but accounting should be in the office and make sure the calculations are correct. The
HR team needs to know if this person is suitable for their department. Actually it
sounds very easy but selecting a suitable person for each department is really not
easy. We need to know who is suitable for what job.
Marketing Director: (1) Practical experience; (2) Credibility with the
client; (3) If you have experience and credibility with the client then the project can
be discussed with both parties “listening to each other”.
AMD (Planning Director): There are so many modellings and techniques
for different departments so selecting only one modeling in general seems a bit
difficult, but from my experience, rather than making a new one, compare with other
cases and make a decision seems a bit more reliable. This is why experience and
documents are critical in every case.
Project Manager: Actually for my case, rather than looking at the
modelling or techniques, I follow my experience. In some urgent cases, I use my
knowledge and give back my opinion, especially for some urgent cases, I don’t look
at techniques or modellings, I look at my past experience, this is why practical
experience is important. But somehow, I assume that this is because I belong to
project management, if numbers were involving such as accounting or finance, they
would probably have different opinions.
2.4 What techniques modelling, and methodologies do you think is the
most useful strategy and why? (Robinson & Last, 2009).
AMD (Financial Director): The most challenging period is when we are
not 100% sure if our budget is correct or not, when we have already estimated and
made a contract, but if we think that there will more spending, that is just chaotic.
This is why we need to look at the contract, everything one by one with every detail.
It is so important. We always need people to look at the contract in order to make a
proper budget.
Marketing Director: The most challenging period is always towards the
end of a project as in many cases schedule has been delayed thus extra labour/
overtime/ equipment costs are incurred which were never allowed for in the budget.
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AMD (Planning Director): When the estimation team has the cost but the
project team disagrees with the cost to do the job, that is quite challenging, but
sometimes if we think it is not possible we need to reject the project.
Project Manager: Most of the time the budgetary cost needs to make
sense to do the project, and if it doesn’t make sense, we cannot do it, for example if
estimate teams thinks we can make a chair with 1 dollar, how can project team or
procurement team agree with this cost? But usually it does not happen, but this kind
of situation has no answers really. Budgetary cost needs to be always reasonable and
make sense.
2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins for the project? (Sawhill & Williamson,
2001).
AMD (Financial Director): We need to buy correct materials as per
correct specifications, and make sure we don’t repurchase materials again as
procurement has the highest portion of spending cost in every projects.
Marketing Director: As materials will be approximately 60% of the costs
then procurement is 1st priority.
AMD (Planning Director): The engineering team and procurement team
need to corporate together and make sure all the specifications are correct, this is very
critical.
Project Manager: From the bidding stage, we need to make sure how
much margin we are planning to make, and of course during the project all the
specifications and construction job need to be done properly, but we all need to make
sure start from the beginning, the estimated budget needs to be reasonable.
3. Management strategy
3.1 What management strategy do you think is the most considerable
strategy in your company for budgetary cost? (Agu, 2006).
AMD (Financial Director): Management is one of the critical parts for the
company, I trust that there has to be certain each department has each management
positions, sometimes everyone can talk and share ideas but job positions are job
positions, meaning that if officers and laborers have some issues or problems with
their current situation, jobs or their working environment, they can always discuss
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with their managers, that is the management of each job positions know who to talk
with. For example, I cannot always talk with everyone, I can consider some critical
parts, but I think managers can try to solve any issues and then later on, if it cannot be
solved, then I can consider to check. There has to be step by step, otherwise
everything cannot be organized. We need to follow the organization chart.
Marketing Director: Management strategy is a major factor in the
company due to the very competitive market at this time. Management strategy
should have a solid plan and make a decision based on our history experience with the
recorded documents including the spent cost. I do not know which strategy is always
correct, sometimes we make wrong decisions, but in order to prevent that, we need to
look at the history and the documents. Management cannot just make decisions with
only their opinions especially without any evidence.
AMD (Planning Director): That is a difficult question, there is no right
management strategy always, I cannot say I am always doing the right management,
and always I am right, but for my point of management strategy, I want to develop
management for the risk committee, for example, if we make a risk committee,
shareholders and board of directors can join together then discuss about possible risk
plans, then everyone can at least share their ideas and be able to find out possible
weakness points. We should avoid brainstorms. Also another management idea is for
field engineers, I think for our company field engineers are very important, so we
need to listen to their voice more! We need to know who are the important people and
make sure to listen their voice.
Project Manager: There is no correct management strategy, management
cannot make all workers satisfied with their job or salary etc. Even if I try to make all
the laborers and staff happy, I cannot do that. This is not only because of my decision,
I also have to follow management’s strategy as well. I think there are strategies for
people or for the company, usually for me is that I care for the people more, so the
main point for the management strategy should be concern for the people.
3.2 If the company spends over the theoretical budget in reality, how do
you think the company should prevent problems and what are the possible solutions?
(Sawhill & Williamson, 2001).
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AMD (Financial Director): The critical point for this matter is we were
always meant to check how much we spend, and then if there were any possible
chances that we may have to spend more, then we need our top management meeting
and then make a decision that whether if we should continue the project or not. There
are no certain solutions really, based on each person’s experience, we need to share
opinions, and based on the current situation, we can make a flexible solution.
Marketing Director: I would say, record everything, record every projects
cost and check the past experience how much we spent, and then try to follow the
trend, but of course it is not easy, but I would say recording is important.
AMD (Planning Director): So I think you are referring to the meaning of
‘what if we lose the net profit?’, answering to that question, you might think we need
to stop the project immediately, but actually that is not the only correct answer,
sometimes based on our partnership experience or based on our finance flow, we can
continue the project, this is not only about the money, we need to look at the big
picture whether if we will work with this client in the long term, anyway the point is
obviously cost controlling is required, we need a cost analyst who can report and
make sure that there are no problems with the cost.
Project Manager: We need details, each department must have a proper
format to record everything and share every detail of spending cost, not just overall.
There must be 2 formats, one is for top management – this should be simplified and
general as top management needs to look at numbers, and the other format should be
for project managers, this format must have all each details how the total cost has
been made, for example, the procurement team can make all purchased materials with
the total spent cost for the top management report, but for the project manager, should
indicate purchased materials what exactly item by item, then we can find out which
item cost the most and why.
3.3 Budget will also have an effect on the financial statement, which will
lead to stakeholders’ investment decision making, how do you think the company can
persuade stakeholders or deal with a difficult stakeholder? (Otley & Pollanen, 2000).
AMD (Financial Director): Management team needs to keep discussing
with IR and analysts, stakeholders want profit always, and to satisfy them, sometimes
IR opens what projects upcoming or sometimes we say nothing. What to tell, or how
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to tell is important, we cannot persuade stakeholders 100%, but we need to know
when is the time that we can tell or not.
Marketing Director: Any business report prepared for the shareholders
must be genuine and not exaggerated thus in the future the shareholders will trust the
reports. Many times companies prepare exaggerated reports but after the shareholders
see the actual financial status and it is lower than the initial report, this is where the
trust is lost.
AMD (Planning Director): Actually stakeholders would not know how
much budget that we made and how much bidding that we submitted, but yes these
are the beginning stages and we need to do properly otherwise in the end, this will
impact on the financial statements somehow. There are so many steps from the
beginning till the end so every step we need to monitor so we will be able to be in a
competitive position in the market.
Project Manager: If we say how to persuade stakeholders, I don’t think
budget is the main factor, I would say marketing will be more important for them. To
be honest, stakeholders do not care about the net profit sometimes, they are
sometimes just waiting for the new projects announcements, and so they can sell or
keep. Anyhow, company should know whether if we should tell stakeholders
everything or not, I guess that is pretty difficult.
3.4 How do you think of establishing credibility with management? Why
would you think credibility is important? (Agu, 2006).
AMD (Financial Director): It is very important, if people are scared to
talk to me then they will not come and see me, that means I cannot know what they
are doing and how the company is going. For my case, almost every day, every 30
minutes people come to talk and report, but I never thought that it is a job that
managers or others should do, I want to listen directly and want people to come
anytime to talk with me, so credibility with management is important.
Marketing Director: If there is no credibility with management then the
analyst serves no purpose as he cannot communicate “straight” with management.
AMD (Planning Director): Sometimes directors need to make a decision
based on information, we do not have a lot of time for every detail to check, I also
want to check everything and every single person, however it is not always possible,
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so I want to make sure each manager and supervisor reports properly with trust. If I
don’t trust them, they cannot trust me.
Project Manager: Credibility is actually quite simple, I need to show it
first, I cannot order my staff without doing it first. I cannot just sit back and tell
people what to do, that is not a good leader, I prove my capability not only by action
but also with my knowledge, I need to prove that I know what I am doing so they can
follow me. That should refer to management as well.
Learning and knowledge management
In business, learning is a part of company to improve especially for
productivity. Innovation is important for employees to keep learning and improve
their knowledge, also for management level as economic is always uncertain, it is
important to predict by every situations and by learning. Learnings could be through
communication, reading, or meeting other experienced experts. There may have such
various ways to keep improve learning.
Knowledge is a powerful strategy to development practices, actions in
management level and support making decisions for business performance. (King,
2005).
Through this interview, I was able to realize that even the top management
level of directors are still keep learning and try to find a way for a better management
strategy continuously. Also, I realized that communication is important in business.
One of the key components to build brand identity or image is by developing effective
business communication throughout the entire business and product life cycle. Apart
from the myriad of benefits shared, effective communication helps the brand stand
out, focus and build trust. Newton with its rich and diversified techniques and
experience caters to all the necessary needs of the customers to build effective
business communication.
Quantitative results
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Fig
ure
8 O
per
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Res
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s fo
r R
epli
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EP
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Pro
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Fig
ure
8 (
Conti
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Fig
ure
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(Conti
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Fig
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(Conti
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Fig
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8
(Conti
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Above are the quantitative results based on the company’s accounting
department. The company estimated costs with the ‘% of income’. It was able to
define how much cost of margin was input and how much total cost the company
spent for the whole project. Additionally it was able to find out which scope was
negative during the project, e.g., transportation. One of interesting facts of lost
margins for transportation was because of inland transportation. Inland transportation
included police escorts, removing obstacles, getting approval for using trailers
(license required), and Department of Highways approval. Therefore, it is important
to make sure what exact scopes and approvals are needed, simply budgeting on inland
transportation without getting approvals will not work out. More discussion will be
provided in the section of discussion in the next chapter.
Cost detail is also attached in the next page for each section of results on a
Quarterly basis. The cost information system plays an important role in every
organization within the decision-making process. An important task of management is
to ensure the control over operations, processes, activity sectors, and not ultimately
on costs. As a project manager, it’s impossible to underestimate the importance of
cost estimation when it comes to successfully completing a project. Before even
approaching a project, it’s important to get a handle on cost estimation to help keep
you on task and in touch with project constraints and limitations. As one of the
defining features of successful progress, accurate project cost estimation must take a
front seat when it comes to setting up a project’s parameters.
When starting a new project, the best way to keep the importance of cost
estimation in mind is to never lose sight of the project’s original budget. While the
numbers may change due to constraints, changes in the project structure or the simple
reality of changing climate demands, keep the initial figure in your head and try to
stick to it. When money-based problems come up, figure them in separately without
instantly tacking them onto the primary figure. This will help when you come to the
end of the project and have to tally up final costs with your original cost estimation.
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Fig
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9
Det
ail
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reakd
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n o
f O
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ost
for
Rep
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FP
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Provide a detailed description of all spending as above, with or without a
budget. This is especially suitable for projects with longer durations, often with
financial uncertainty more often. When it comes to cost estimates for a project, be
sure to stick to it using one of four reliable methods. Knowing and trusting
methodology is essential to accurately forecasting and measuring costs.
Try a similar estimate for projects with little detail. If you are working in a
project similar to a project you have done in the past, you can use that data for
parametric estimation. If you have important data but do not have all the information
you need, 3-point estimation is a useful deduction method. Bottom-up estimation is
considered the gold standard for projects that require extensive cataloging of cost,
progress, and time tracking.
The most effective project cost estimates come from a combination of
speculation and database charting. When you think of time as money, you are ahead
of the game. The more you can graph the number of employee hours and estimate the
total time spent on each segment of the project, the sooner you can present a
consolidated estimate of the cost of this and other projects. By thinking of time as
money, you can turn indirect costs into direct costs and estimate your final budget
more accurately.
The critical point of cost management is the success of project productivity.
Maintaining a systematic plan to tasks during aware of cost control is not an easy
skill. Managing time and resources is critical to achieving your goals, but ultimately
cost performance will determine the desired outcome of your project.
Project managers may require strict cost control to properly manage their
budget. In other words, they have to be aware of where the money is always allocated
and whether it is necessary to check to make sure to meet the planned budget.
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CHAPTER 5
CONCLUSION, DISCUSSION AND RECOMMENDATIONS
Conclusion
This chapter aims to summarize what has been discussed and to provide
suitable conclusions from what had been found from the results of interviews
conducted. The conclusions are based from the facts and from the company's
managements’ interviews and their information of perspectives were gathered and
also compared with literature reviews in order to support their statements.
The responses from the conducted surveys show that the company often
achieved different goals for each project.
Through in-depth interviews, their overall answers to the questions were
reviewed, results were achieved with a variety of different opinions with similar
answers and nothing. There were three questions related to cost management in this
topic: business analysis and budgeting, cost control, and management strategy. Each
subtopic is individually discussed by each.
Business analysis and budgeting – The topic of this question allows us to
discover that practical experience and analysis are important for business analysis.
This will also support important decision making. You can also update the current
situation to see how the situation is progressing and show you how to implement
some ideas for future business development. In addition, proper analysis of data was
also mentioned in IT. As a result, it is possible to analyze small or large amounts of
data quickly. If analysis is important, planning is also important, planning should be
well prepared, robust and predictive based on the real-time savings period above the
project schedule. In general, the main points that should always be considered when
analyzing a business are cost, production, time schedules, and net income.
Cost control – Through in-depth interviews, their idea of cost management
is a common goal to improve the cost-effectiveness of the business by how to reduce
the cost inn which main sections during the projects, also how to resolve in a long
period within a business to prevent to spend a large amount of cost. Every director
believes the main goal of cost management is to reduce costs and improve or evaluate
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them to make sure that they will have good results in the future. On the other hand,
even when looking at the numbers, the project manager was discussing people. In the
end, we are working with people. The most important period to complete on time.
Management strategy –Through interviews, it is important to know that all
departments are related and to work together to make a profit for the company.
Management strategy is to make the company better and to always earn a profit. This
is important, as profits affect employee salaries. It was found that it was important to
set priorities, resources, strengthen operations, employees and other stakeholders to
promote common goals and to establish an agreement on the intended results and
results. Looking to the future, management needs disciplinary effort to create the
decisions to have proper procedure for organization, especially for what actions to be
taken for their aim, and that effective strategy is required.
Looking at the results of the ABCHI cost summary, it is possible to identify
which sections are losses or gains, and based on those losses in the sections of the
description, management defines which sections have losses You can investigate the
details quarterly. . Worth noting were consumables, labor costs, and transportation as
the main areas of loss. The reason is that the project schedule was delayed, the labor
had to wait longer than expected, and part of the transport had to be done by air cargo.
These summary costs can indicate what the problem is and what the company needs
to investigate and find a solution. Also, because costs are organized quarterly, you can
investigate specifically by period. Budget control usually involves frequent reporting
of actual achievements and costs relative to budget achievement, followed by
management reviews, and necessary corrective actions.
This research was self-designed questionnaire based on literature reviews
and management’s advice included company recommendations, reference was
included. According to the survey, budget preparation is mostly monitored by their
committees or internal audit, which controlled by financial director and CFO. Created
annually and submitted to the board for approval. By taking frequent management
actions, the company can avoid issues such as inflation and waste. However, there are
also uncertainty issues regarding human resources and natural causes, and these issues
are not only considered by the system.
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In conclusion, there are two factors to consider. One is to implement a
budget system, and the other is human resources (such as union, protest, or incentive
issues) and natural issues (such as bad weather also that both factors may affect the
cost of the budget) there is, and this should always be reviewed.
Discussion
The sales budget could be a part of the total budget, due to sales could relate
to all parts of the total budget. According to the respondents, at the beginning period
of preparing sales budget, the amount of productivity, labor facilities, necessary
capital, and various selling expenses are included in the budget. The budget for
production is created when only after the sales budget is made. Respondents stated
that the productivity for the budget provided a number of units to be produced for
each budgets to aim to target the sales budget. According to interviewees, the final
inventory are connected to the project budget.
Proper system of the budgetary plan can support fund to be available to
investors, development finance partners, and domestic and international donors
(Hansen et al., 2003), therefore could be one of reasons why sales budget or the
budgetary plan is critical for the company to make sure how to manage the cost
control as this will be involving with many sectors later on such as investors,
stakeholders, and financial partners.
Based on the answers received, it indicates that the preparation of the cash
budget at ABCHI indicates a cash inflow and cash outflow flow to ensure that
sufficient cash is available during the budget period. You are the master budget is the
last prepared budget. It shows a summary of all the various supplementary budgets.
According to the respondents, after the master budget is completed, it will be
represented to the Board of Budget Committee to see if it represents an acceptable
plan for next year’s organization.
Respondents who is a financial director from the finance department put
together a summary of each budget as a master budget after various budgets were
completed. Questioning who will approve for the final budget, the interviews states
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that it is most critical and risk part to take responsibility to take responses on this final
budget.
This approach is to help management anticipate the future, prepare for
market conditions, inflation and unforeseen negative economic changes. And it also
helps management achieve the desired goals. From the responses received on ethical
issues that are likely to affect budgets, respondents say that ABCHI’s budgets
sometimes suffer from adverse environmental issues such as the lack of true reports
from subordinates and unforeseen increases for water, electricity, fuel, etc. without
true integrity.
Grove et al. (2007) their research describe the qualitative method is a
“systematic subjective approach used to describe life experiences and situations.”
Which demonstrates that in this research of management’s interview can also
approach their life experience and opinions, each person has different perspective,
therefore a variety of conducting from different department been completed
successfully.
In addition, Parahoo (1997), in his research confirms that qualitative
research is not only focusing on humans past experiences but also emphasizes their
individuality of the individual. This is why conducting an each person’s interview
able to create their own individual’s idea especially connected to organization.
As to how much the company uses budget control, management usually
observes that the projected balances are compared to the actual balances and a
difference report is made to indicate whether the differences made are favorable or
disadvantageous it was done. Management does this in order to be better prepared for
such future events.
However, in order to achieve the goal, it is to believe that not only cost
control, budgetary control plan can be the solutions for the business. Alternatively, it
is critical to focus on employees working performance. Company may not only give a
pressure on employees to expedite to complete the job, but also needs to increase
positive thinking for them to have, such as providing incentives, if the project has
been completed successfully well with margins, or when making a budget, incentives
to be also calculated depends on the productivity (Organ, 1988; Podsakoff et al.,
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2000) also states that budget-based incentives reduce a rate of employees, and
company needs to provide trust and encouragement.
Figure 10 Flow chart for summary of budgetary and cost control
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Figure 10 (Continued)
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Recommendation from the research
The results of this study demonstrates that budgets are overestimated as a
result of these issues. Based on the survey results, it is recommended that executives
provide some form of incentive and encourage them to create appropriate budgets for
each department using appropriate information that executives and budgeting staff can
rely on. In addition, procedure guidelines for budgeting costs and analyzing problems
should always be available. It is also important to take care of human resources and
apply the system properly, as unexpected situations may occur while the project is
underway.
In conclusion, it is able to recommend that proper calculations for budgetary
and cost control are necessary, and to be discussed constantly. Budget is
recommended to add incentives for employees in order to increase productivity, a
small portion of unexpected situation of cost spending out of the total contract amount
due to inevitable issues shall be considered, also compare the past budget of which
parts been mostly spent from the past projects shall be found and investigate the
reasons. From this research, able to conclude that proper budget and budgeting system
were applied and used to prepare the company's budget.
Recommendation for the future research
1. There was limitation of the research, which is only focusing on only one
sample of the company, therefore, it is recommended that more related companies
more than one that are doing similar business are would be recommended to do
research in the future.
2. In results of this research was able to be found that, which part has
significant highest spent cost to be monitored, however there is a chance that other
companies where doing similar projects may have different results, therefore, it is
recommended to compare with other companies as well to clarify the results.
3. To promote effective use of the organization's limited resources for the
future of company systems, such as procedures for management level, are to be
provided to make sure that company is looking forward to in time must be completed.
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Budgeting plans are prepared in advance, the goals that company wants to achieve
are, in most cases, easily recognized. Budget preparation supports to design or clarify
horizontal or vertical communication lines within an organization.
4. The budget can be set up based on existing budget in control system,
however company might need to consider providing incentives to staffs for increase
their working capacity when draft budget is made for the potential project.
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REFE REN CES
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APPENDICES
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APPENDIX 1
Interview questions
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INTERVIEW QUESTIONS
Briefing: Thank him/ her for participation, introduce myself (name and
profession), define the situation for the interviewee (confidentiality, recording, about
50 minutes, plus a short discussion afterwards), briefly state the purpose of the
interview, and asking if the interviewee has any questions before the interview
Main subjects/
Researcher questions
Interviewer questions
Business analysis and
budgetary
What do you think are the tools to be considered
as the most important for business analysis for
cost investigation? (Smakthai, personal
communication, May 10, 2018).
What are the most important points a business
analyst must take care of when preparing a
business plan? Why is business analysis related to
budgetary control? (Sawhill & Williamson, 2001).
Where do you see the role of a business analyst
fitting into an organization? (Dargan, personal
communication, May 10, 2018).
What are the recommendations or suggestions for
analyzing the implications of budget for projects?
(Lee, personal communication, May 10, 2018).
Which sector would be the search area in terms of
business development related to budgetary
analysis? (Sawhill & Williamson, 2001).
Why do you think the key strengths of budgetary
control is related to business analysis? (Lee,
personal communication, May 10, 2018).
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Main subjects/
Researcher questions
Interviewer questions
Cost control Why do you think there are different results of
control after seeing the results? (Agu, 2006).
What do you think are possible ways to make sure
we can maintain the same budget in theory and
reality? (Sawhill & Williamson, 2001).
What analysis and modeling techniques and
methodologies have you found be the most
effective and why? (Robinson & Last, 2009).
When is the most challenging period for handling
the budget? And what are your suggestions?
(Smakthai, personal communication, May 10,
2018).
Which factor should be the 1st priority that the
company should consider in order to prevent lost
margins? (Sawhill & Williamson, 2001).
Management strategy What management strategy do you think is most
considerable strategy in your company for
budgetary cost? (Agu, 2006).
How do you think the company should prevent
over-spending the planned budget, and what are the
possible solutions? (Sawhill & Williamson, 2001).
The budgetary will also effect the financial
statement, which will influence stakeholders’
investment decision making. How do you think
the company can persuade stakeholders or deal
with a difficult stakeholder? (Hansen et al., 2003).
How do you think you can establish credibility
with management? Why would you think
credibility is important? (Agu, 2006).
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Main subjects/
Researcher questions
Interviewer questions
Debriefing Are there any more things you would like to say
before we end the interview?
May I contact you, if further questions should
arise?
Thank you for your cooperation
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APPENDIX 2
Interview transcript
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INTERVIEW TRANSCRIPT
Mrs. Chanchira Smakthai runs a bit late. She is a bit in a hurry, just came from a
meeting and has another meeting to go to. She tells me about what she knows this
interview is about. This is very precise. I tell her about the background of this
interview anyhow including its confidentiality.
Her area of responsibility is finance, financial reporting, costs, sales and
analysis of this on group level and communicating these to the local entities. She tries
to understand what the local entities mean by their reports and communicates these
findings to managers.
Q: 1.1 Which tools do you consider as the most important for business
analysis for cost investigation? (Smakthai, personal communication, May 10, 2018).
AMD (Financial Director): Recording is critical, the need to be organized
well and record properly, analysts need to analyze well -- that is their job and making
a decision is our job. In order to make decisions by the board of directors, information
is critical, therefore analyzing all the numbers, how much we spent, and how much
we made margins, using tools such as graphs, numbers, excel sheets or any are
essential. Cost investigation is really all about numbers.
Q: 1.2 What are the most important points that a business analyst must take
care of when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
AMD (Financial Director): Try to avoid showing repetitive things, look at
the negative plans that we experienced and give positive suggestions. The business
analysis helps to uncover the power of your data to become analytically driven
throughout your entire organization. Make better and faster business decisions with
the power of business analytics and gain rich experience of your business with data
analysis dashboard. No matter what your business is, the data analytics
technology helps every enterprise to measure and achieve their desired goals. This
analytics approach also helps to predict the future and overcome the business
challenges without relying on IT. Gain new approaches of business analytics to take
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the data driven decisions within a short period of time with voice and search enabled
analytics methods. This technique gives excellent results in analyzing small or huge
amounts of data quickly with search terms. No need to waste time on analyzing all
data, instead you can easily search and build reports without wasting a huge amount
of time. The real-time data visualization is useful in the desired charts graph and
maps.
Q: 1.3 What are your recommendations or suggestions for analyzing the
budget for projects? (Dargan, personal communication, May 10, 2018).
AMD (Financial Director): Actually business analysts need to contact with
every department, and need to request all the information they need. Business analysts
need to be the center of the tower for budgeting and for the future management.
Business development, also called pre-sales, is all the front-end work that gets done
before money changes hands. The business analyst is an agent of change. Business
analysis is a disciplined approach for introducing and managing change in
organizations, whether they are for-profit businesses, governments, or non-profits.
Business analysis is used to identify and articulate the need for change in how
organizations work, and to facilitate that change. As business analysts, we identify
and define the solutions that will maximize the value delivered by an organization to
its stakeholders. Business analysts work across all levels of an organization and may
be involved in everything from defining strategy, to creating the enterprise
architecture, to taking a leadership role by defining the goals and requirements for
programs and projects or supporting continuous improvement in its technology and
processes.
Q: 1.4 What are your recommendations or suggestions for analyzing the
budget for projects? (Lee, personal communication, May 10, 2018).
AMD (Financial Director): Look at the history and assess how we can do
better, also would like to mention about some of not reliable reports to be checked
properly. Sometimes there are unstable bills that company is paying constantly which
we need to clarify the issue if the spent cost is not stable, this refers to water bills,
fuels, or electricity bills etc.
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Q: 1.5 Which sector would be the search area in terms of business
development that is related to budgetary business analysis? (Sawhill & Williamson,
2001).
AMD (Financial Director): Seems a bit of a broad area, we need to
sometimes go with the flow or sometimes need to make a new decision that other
companies do not make. But the search area should be general; for example, if we are
focusing on offshore projects, then we should keep looking for offshore general trends
and clients' plans.
Q: 1.6 Why do you think the key strengths of budgetary control is related to
business analysis? (Lee, personal communication, May 10, 2018).
AMD (Financial Director): Most critically they need to know how to assist
with the business case. Looking at the budget, and providing proper plans and advice,
this shall be considered as a key strength.
Q: 2.1 Why do you think there are different results of control after having
seen the results? (Agu, 2006).
AMD (Financial Director): Due to different perspectives, or different
understandings of the concept, even if we always estimate both theoretical and real
budget to be the same, from past experience we know that it cannot always be the
same, and if it is the same, then that is something strange really. But main point is cost
controlling, we are not looking at the difference but looking at the control. We should
focus on the spending cost that should not be over the budget, that’s it. One advice is
that a project cost controller must keep track of ACTUAL cost expenditures on the
project and compare it to the BUDGET (usually on monthly basis) and report the
variance to the project management.
Q: 2.2 How do you think there are possible ways to prevent to make sure
we can achieve the same budget in theory and reality? (Sawhill & Williamson, 2001).
AMD (Financial Director): What I can think of is the cost monitoring, it is
critical that we need to keep monitoring how much we are spending while we are
doing the project on a weekly basis, and if there is a cost that is higher than we
expected, we would need to make a decision about how to reduce it. Costs are
associated with translating factors of production into outputs, i.e. land, labour, capital
etc. have to be turned into revenue generators. Costs are a function of output, and the
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window for which the average costs of production decrease is called economies of
scale. Eventually, your average costs will escalate and you hit dis-economies of scale.
Also, when your product or service goes to market, it will have a particular
reception, which might be good, better or at par with your vision. Eventually, it is
easier to reduce costs and control them rather than generate fresh revenue centers.
This remains true for industries and services. There is also a trade-off to providing
these services associated with products.
For instance, it might be profitable for a corporation to set up a system,
whilst it might not be possible or profitable to install and spend the costs because they
would be too high. Similarly, services might not run at a frequency similar to bigger
companies with high demand. A business, any business finds it easier to control or
track intrinsic variables such as costs of labour, raw materials, factors of production
rather than track extrinsic variables such as demand and customer switching.
Q: 2.3 What analysis and modeling techniques and methodologies have you
found be the most effective and why? (Robinson & Last, 2009).
AMD (Financial Director): Each department requires different skills, for
example marketing should be active, we need to take action and discuss with clients,
but accounting should be in the office and make sure the calculations are correct. The
HR team needs to know if this person is suitable for their department. Actually it
sounds very easy but selecting a suitable person for each department is really not
easy. We need to know who is suitable for what job.
Q: 2.4 When is the most challenging period while handling the budget? And
what are the suggestions? (Smakthai, personal communication, May 10, 2018).
AMD (Financial Director): The most challenging period is when we are not
100% sure if our budget is correct or not, when we have already estimated and made a
contract, but if we think that there will more spending, that is just chaotic. This is why
we need to look at the contract, everything one by one with every detail. It is so
important. We always need people to look at the contract in order to make a proper
budget.
Q: 2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins for the project? (Sawhill & Williamson,
2001).
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AMD (Financial Director): We need to buy correct materials as per correct
specifications, and make sure we don’t repurchase materials again as procurement has
the highest portion of spending cost in every projects.
Q: 3.1 What management strategy do you think is the most considerable
strategy in your company for budgetary cost? (Agu, 2006).
AMD (Financial Director): Management is one of the critical parts for the
company, I trust that there has to be certain each department has each management
positions, sometimes everyone can talk and share ideas but job positions are job
positions, meaning that if officers and laborers have some issues or problems with
their current situation, jobs or their working environment, they can always discuss
with their managers, that is the management of each job positions know who to talk
with. For example, I cannot always talk with everyone, I can consider some critical
parts, but I think managers can try to solve any issues and then later on, if it cannot be
solved, then I can consider to check. There has to be step by step, otherwise
everything cannot be organized. We need to follow the organization chart.
Q: 3.2 If the company spends over the theoretical budget in reality, how do
you think the company should prevent problems and what are the possible solutions?
(Sawhill & Williamson, 2001).
AMD (Financial Director): The critical point for this matter is we were
always meant to check how much we spend, and then if there were any possible
chances that we may have to spend more, then we need our top management meeting
and then make a decision that whether if we should continue the project or not. There
are no certain solutions really, based on each person’s experience, we need to share
opinions, and based on the current situation, we can make a flexible solution.
Q: 3.3 Budget will also have an effect on the financial statement, which will
lead to stakeholders’ investment decision making, how do you think the company can
persuade stakeholders or deal with a difficult stakeholder? (Otley & Pollanen, 2000).
AMD (Financial Director): Management team needs to keep discussing with
IR and analysts, stakeholders want profit always, and to satisfy them, sometimes IR
opens what projects upcoming or sometimes we say nothing. What to tell, or how to
tell is important, we cannot persuade stakeholders 100%, but we need to know when
is the time that we can tell or not.
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Q: 3.4 How do you think of establishing credibility with management? Why
would you think credibility is important? (Agu, 2006).
AMD (Financial Director): It is very important, if people are scared to talk
to me then they will not come and see me, that means I cannot know what they are
doing and how the company is going. For my case, almost every day, every 30
minutes people come to talk and report, but I never thought that it is a job that
managers or others should do, I want to listen directly and want people to come
anytime to talk with me, so credibility with management is important.
Mr.Seong Jin Lee was available at his office, while he was reviewing his documents,
I asked if he is available to do the interview which already discussed before. He said
yes, so we started to have an interview.
Q: 1.1 What do you think are the tools to be considered as the most
important for business analysis for cost investigation? (Smakthai, personal
communication, May 10, 2018).
AMD (Planning Director): Experience is important so sometimes analysts
can also give their ideas and opinions. Business analysis involves communicating
complex technical details in easy-to-understand language to stakeholders, including
developers, administrative personnel, and senior management. A project manager has
to understand the role of the project in improving business processes and achieving
cost savings for the company. This is important because the project manager has to
explain the organizational context to their team members and communicate the
technical details to their peers and to senior management. For example, a new quality
control system project in the manufacturing department may affect data processing
functions in accounting, which means that project managers in both departments
would have to grasp the technical details to manage their respective implementations.
Q: 1.2 What are the most important points a business analyst must take care
of when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
AMD (Planning Director): Look at the past experience, compare the
numbers. Additionally changed orders are important, we need to make sure whether
this shall be considered and how we can respond later. Business analysis is having a
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critical understanding of the revenue drivers for a company. Business analysis can
also help teams carve out strategic plans to increase revenue, reduce costs and
compete across industries. Business analysis is integral to reviewing the effectiveness
of small tasks up through major changes within a company: new business, changing
strategies, adding in additional teams. Business analysis also helps companies carve
out targets to help them achieve near and long-term goals. If you want to develop your
business, you are building your own business, your clients aren’t happy with your
services or product and you need to revamp, there are holes in your company
processes and you are trying to understand how to better integrate systems to help
streamline, retention is low and you want to keep your best employees happy -- all of
these things (the list is endless) can be fixed with the help of business analysis. You
can hire a Business Analyst full time or part time to help you with your various
business needs. Business Analysts are objective and present the facts to you with
actions to get better.
Q: 1.3 Where do you see the role of a business analyst fitting into an
organization? (Dargan, personal communication, May 10, 2018).
AMD (Planning Director): I think business analysts should provide new
ideas and new information every day, and if management requests a plan, they need to
come up immediately with draft plans and ideas. Business analysts need to gather all
the information from every department, same as like planning department. Business
Analysis as a task can be performed by the data analysis particularly during the initial
stage when the data model, data analysis model and presentation model are defined.
In the Initial stages, when models are defined, we always start with understanding the
Business problem. Business user needs which data in what format, when do the need
it and why they need it. So in a company there could be a scenario for a data analyst
where the business analysis and data analysis task can be performed by the same
person, that person should possess skills required for business analyst or data analyst
(They have created a profile called business analytics or BI analyst) or it could be
divided into two roles which are data analyst and business analyst. (Which seems to
be more popular in the Indian IT Industry).
Q: 1.4 What are the recommendations or suggestions for analyzing the
implications of budget for projects? (Lee, personal communication, May 10, 2018).
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AMD (Planning Director): Cost monitoring, and apply same format for
every project. Also, controlling people is very important, currently I am checking the
inventory list and some of materials are actually not there but still our inventory list
says we have stock. One example is welding rods, we have so many welding rods in
the warehouse, and we did not even check why we purchased and why the project
team requested so many welding rods. There were many different opinions about this,
actually welding rods are difficult to estimate the exact quantity before the project,
because humans are using the welding rods, not robots, so each person uses them
differently with their own procedure, some people use more, some people use less. If
we used robots, then we can exactly estimate how much we may use for the project.
Anyhow, back to the point, for this kind of case, I realized we need a quantity
surveyor and make sure each person uses how much. Also we should make sure only
which suitable position or role can request any additional materials, so that means not
anyone such helpers can request for more materials, that shall not be acceptable. I
don’t think we need a quantity surveyor for every project or as a permanent job, I
consider case by case even though we pay high salary, I trust that this would work
better, and this was already discussed with financial AMD as well. We think we will
pay higher salary but higher case by case would be more suitable.
Q: 1.5 Which sector would be the search area in terms of business
development related to budgetary analysis? (Sawhill & Williamson, 2001).
AMD (Planning Director): Search area would be news and newly signed
agreements with other companies and clients; for example, petrobras recently
announced a partnership to complete the refinery at the Rio de Janeiro Petrochemical
Complex in Itaboraí (Comperj), one of the major symbols of the corruption scheme.
That existed in the company and that was revealed by operation car wash. In a
statement to the market, petrobras informed that it has signed a letter of intent with the
Chinese giant China National Petroleum Corporation International (CNPCI) to detail
the execution of joint projects that include the construction of a refinery in Comperj,
as well as the participation of the Chinese in fields of Marlim, in the Campos Basin.
Every kind of information, even if our company is not involved, we need to keep
researching and making sure how the business is going.
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Q: 1.6 Why do you think the key strengths of budgetary control is related to
business analysis? (Lee, personal communication, May 10, 2018).
AMD (Planning Director): As I am looking at the numbers, my opinion is to
minimize the cost as much as we can with the same quality of work. It is an endless
dilemma that we always need to face up to. To make sure how to know what we are
doing, I think assessing every project with cost control is essential.
Q: 2.1 Why do you think there are different results of control after seeing
the results? (Agu, 2006).
AMD (Planning Director): Business is either subjected to profit or loss. Any
investment done by the management always thrives among the market to optimize its
productivity and approaches to achieve profits. But there are times when a certain
condition does not support and market becomes too vicious. To undermine such
situations a firm has to take initiatives in order to reduce costs and make adjustments
in business. Perhaps it is the fault of the measure, which should not ever happen, but
we cannot make a budget 100% accurate, so this is why we put enough margins on
the net profit and indirect costs. If we try to make it the same or the less, there will be
risks.
Q: 2.2 What do you think are possible ways to make sure we can maintain
the same budget in theory and reality? (Sawhill & Williamson, 2001).
AMD (Planning Director): In order to protect the budget, even if we spend
over the budget, I don’t really think changing their job or role while continuing the
project is not a good idea. What we should consider is that just look at the last digits,
we don’t need to look at the details because that is what each department manager
will do, so how we should preserve on the management side, try not to change, but
only looking at the large final numbers. Actually trying to change the internal system,
especially while the project is on-going, is not a good idea.
Q: 2.3 What analysis and modeling techniques and methodologies have you
found be the most effective and why? (Robinson & Last, 2009).
AMD (Planning Director): There are so many modellings and techniques for
different departments so selecting only one modeling in general seems a bit difficult,
but from my experience, rather than making a new one, compare with other cases and
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make a decision seems a bit more reliable. This is why experience and documents are
critical in every case.
Q: 2.4 When is the most challenging period for handling the budget? And
what are your suggestions? (Smakthai, personal communication, May 10, 2018).
AMD (Planning Director): When the estimation team has the cost but the
project team disagrees with the cost to do the job, that is quite challenging, but
sometimes if we think it is not possible we need to reject the project.
Q: 2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins? (Sawhill & Williamson, 2001).
AMD (Planning Director): The engineering team and procurement team
need to corporate together and make sure all the specifications are correct, this is very
critical.
Q: 3.1 What management strategy do you think is most considerable
strategy in your company for budgetary cost? (Agu, 2006).
AMD (Planning Director): That is a difficult question, there is no right
management strategy always, I cannot say I am always doing the right management,
and always I am right, but for my point of management strategy, I want to develop
management for the risk committee, for example, if we make a risk committee,
shareholders and board of directors can join together then discuss about possible risk
plans, then everyone can at least share their ideas and be able to find out possible
weakness points. We should avoid brainstorms. Also another management idea is for
field engineers, I think for our company field engineers are very important, so we
need to listen to their voice more! We need to know who are the important people and
make sure to listen their voice.
Q: 3.2 How do you think the company should prevent over-spending the
planned budget, and what are the possible solutions? (Sawhill & Williamson, 2001).
AMD (Planning Director): So I think you are referring to the meaning of
‘what if we lose the net profit?’, answering to that question, you might think we need
to stop the project immediately, but actually that is not the only correct answer,
sometimes based on our partnership experience or based on our finance flow, we can
continue the project, this is not only about the money, we need to look at the big
picture whether if we will work with this client in the long term, anyway the point is
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obviously cost controlling is required, we need a cost analyst who can report and
make sure that there are no problems with the cost.
Q: 3.3 The budgetary will also effect the financial statement, which will
influence stakeholders’ investment decision making. How do you think the company
can persuade stakeholders or deal with a difficult stakeholder? (Hansen et al., 2003).
AMD (Planning Director): Actually stakeholders would not know how much
budget that we made and how much bidding that we submitted, but yes these are the
beginning stages and we need to do properly otherwise in the end, this will impact on
the financial statements somehow. There are so many steps from the beginning till the
end so every step we need to monitor so we will be able to be in a competitive
position in the market.
Q: 3.4 How do you think you can establish credibility with management?
Why would you think credibility is important? (Agu, 2006).
AMD (Planning Director): Sometimes directors need to make a decision
based on information, we do not have a lot of time for every detail to check, I also
want to check everything and every single person, however it is not always possible,
so I want to make sure each manager and supervisor reports properly with trust. If I
don’t trust them, they cannot trust me.
Mr.Peter Jorn went to construction site and just came back to his office, he is also
quite busy handing a project, I got to know him when I had to go to the site job every
day, so he was willing to support me and provided some time to do an interview.
Q: 1.1 What do you think are the tools to be considered as the most
important for business analysis for cost investigation? (Smakthai, personal
communication, May 10, 2018).
Project Manager: Follow up basis is important, this means analysts need to
make sure of all details and information to not to miss anything, and to summarize
well. Business analysis plays an important role in project implementation, which
involves development and testing. Development includes modeling internal business
processes and data flow, identifying critical components that affect system
performance, and preparing test plans. The testing phase involves testing the
individual components first, followed by testing the integrated system.
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Q: 1.2 What are the most critical points for a business analyst to consider
when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
Project Manager: Without monitoring, you cannot measure…without
measuring you cannot control…Without controlling you cannot give a direction to
it…Without giving a direction you cannot see the progress…so you call in the
Analysis, which consists of monitoring, measuring, controlling and directing, is
important for the growth of the business. Depends on the objective and capacity there
tools, people available to compliment you to fast forward the growth of the business.
Business analysts need to work with the planning team and record all the numbers that
we spent, then check the budget that we made from the beginning. We need to check
and compare why they matched or did not. Business plan needs to be solid but very
detailed. A business analyst handles some of the crucial parts of a successful project.
A Business Analyst is responsible for identifying and defining the solutions that will
maximize the value delivered by an organization to its stakeholders. Business analysts
work across all levels of an organization and may be involved in everything from
defining strategy, to creating the enterprise architecture, to taking a leadership role by
defining the goals and requirements for programs and projects or supporting
continuous improvement in its technology and processes.
Q: 1.3 Where do you see a business analyst to be suitable into an
organization? (Dargan, personal communication, May 10, 2018).
Project Manager: Business analysts should provide hypothetical plans,
document its business or systems. They need to know how to assess the business
model. Planning, monitoring, simplifying documents or assisting with the business
case etc. there are many, and in order to have all those requirements, they need to
know what management wants and what management wants to see.
Q: 1.4 What are the recommendations or suggestions for analyzing the
implications of budget for projects? (Lee, personal communication, May 10, 2018).
Project Manager: There should be the same information and instruction for
analyzing every project. A task can be performed by data analysis particularly during
the initial stage when the data model, data analysis model and presentation model are
defined. In the initial stage, when models are defined, we always start by
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understanding the business problem. Business users needs which data in what format,
when do the need it, and why do they need it? So in a company there could be a
scenario for the data analyst where the business analysis and data analysis tasks can
be performed by the same person, and that person should possess the skills required
for business analyst or data analyst.
Q: 1.5 Which sector would be the search area in terms of business
development related to budgetary analysis? (Sawhill & Williamson, 2001).
Project Manager: The searching area for internal basis, and cost monitoring
is essential. I would say indirect and net profit are important for business development
and also for the current situation. Following the trends and looking at the world is also
important, but we should also make sure that we need to look into the details
especially of our internal system.
Q: 1.6 Why do you think the key strengths of budgetary control is related to
business analysis? (Lee, personal communication, May 10, 2018).
Project Manager: How to make production more efficient would be the key
point, because this means including everything basically. Efficiency would include
the cost, production, time schedule, and the net profit.
Q: 2.1 Why do you think there are different results of control after seeing
the results? (Agu, 2006).
Project Manager: Yes, there will be different results but the main factors will
be due to such as unexpected issues that happen that were out of agreement. For
example, who can expect while doing our jobs, that all of sudden a client requests
additional jobs; this request is out of our budget control. This is just only one
example, but what it means is that something that we cannot control will result in the
difference. Also, numbers can be only just numbers, while the project is ongoing, we
are actually working with people, so we cannot only just simply looking at the
numbers, we sometimes need to provide some benefits to encourage them to work if
the schedule is very tight. There are unexpected situations which occur every time,
and it is risky to only look at the budgetary control without considering people’s level
of motivation.
Q: 2.2 What do you think are possible ways to make sure we can maintain
the same budget in theory and reality? (Sawhill & Williamson, 2001).
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Project Manager: We need to look at the cost and progress, they should be
always be about the same or have a similar rate. If there is a big difference between
cost and progress, I can guarantee that there is a wrong calculation, so I think to
prevent, by the time, we should look at the rate of the progress and the cost. Cost
means when there is an issued slip, it does not count as an asset anymore.
Q: 2.3 What techniques modelling, and methodologies do you think is the
most useful strategy and why? (Robinson & Last, 2009).
Project Manager: Actually for my case, rather than looking at the modelling or
techniques, I follow my experience. In some urgent cases, I use my knowledge and
give back my opinion, especially for some urgent cases, I don’t look at techniques or
modellings, I look at my past experience, this is why practical experience is
important. But somehow, I assume that this is because I belong to project
management, if numbers were involving such as accounting or finance, they would
probably have different opinions.
Q: 2.4 When is the most challenging period for handling the budget? And
what are your suggestions? (Smakthai, personal communication, May 10, 2018).
Project Manager: Most of the time the budgetary cost needs to make sense to
do the project, and if it doesn’t make sense, we cannot do it, for example if estimate
teams thinks we can make a chair with 1 dollar, how can project team or procurement
team agree with this cost? But usually it does not happen, but this kind of situation
has no answers really. Budgetary cost needs to be always reasonable and make sense.
Q: 2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins? (Sawhill & Williamson, 2001).
Project Manager: From the bidding stage, we need to make sure how much
margin we are planning to make, and of course during the project all the
specifications and construction job need to be done properly, but we all need to make
sure start from the beginning, the estimated budget needs to be reasonable.
Q: 3.1 What management strategy do you think is most considerable
strategy in your company for budgetary cost? (Agu, 2006).
Project Manager: There is no correct management strategy, management
cannot make all workers satisfied with their job or salary etc. Even if I try to make all
the laborers and staff happy, I cannot do that. This is not only because of my decision,
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I also have to follow management’s strategy as well. I think there are strategies for
people or for the company, usually for me is that I care for the people more, so the
main point for the management strategy should be concern for the people.
Q: 3.2 How do you think the company should prevent over-spending the
planned budget, and what are the possible solutions? (Sawhill & Williamson, 2001).
Project Manager: We need details, each department must have a proper
format to record everything and share every detail of spending cost, not just overall.
There must be 2 formats, one is for top management – this should be simplified and
general as top management needs to look at numbers, and the other format should be
for project managers, this format must have all each details how the total cost has
been made, for example, the procurement team can make all purchased materials with
the total spent cost for the top management report, but for the project manager, should
indicate purchased materials what exactly item by item, then we can find out which
item cost the most and why.
Q: 3.3 The budgetary will also effect the financial statement, which will
influence stakeholders’ investment decision making. How do you think the company
can persuade stakeholders or deal with a difficult stakeholder? (Hansen et al., 2003).
Project Manager: If we say how to persuade stakeholders, I don’t think
budget is the main factor, I would say marketing will be more important for them. To
be honest, stakeholders do not care about the net profit sometimes, they are
sometimes just waiting for the new projects announcements, and so they can sell or
keep. Anyhow, company should know whether if we should tell stakeholders
everything or not, I guess that is pretty difficult.
Q: 3.4 How do you think you can establish credibility with management?
Why would you think credibility is important? (Agu, 2006).
Project Manager: Credibility is actually quite simple, I need to show it first,
I cannot order my staff without doing it first. I cannot just sit back and tell people
what to do, that is not a good leader, I prove my capability not only by action but also
with my knowledge, I need to prove that I know what I am doing so they can follow
me. That should refer to management as well.
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Dave Dargan came back from Australia after his business trip, he has another
meeting with client, so we decided to have a quick talk and have an interview.
Q: 1.1 What do you think are the tools to be considered as the most
important for business analysis for cost investigation? (Smakthai, personal
communication, May 10, 2018).
Marketing Director: The most important factor is for the business analysts to
have practical experience. Business analysis plays an important role in project
implementation, which involves development and testing. Development includes
modeling internal business processes and data flow, identifying critical components
that affect system performance, and preparing test plans. If they have no experience, I
don’t think it is possible for the company to have any properly analysed results, so
hiring someone who has practical experience is better than training them.
Q: 1.2 What are the most important points a business analyst must take care
of when preparing a business plan? Why is business analysis related to budgetary
control? (Sawhill & Williamson, 2001).
Marketing Director: The business analyst must review previous business
plans and identify what actions in the previous plans were not positive. On identifying
the negative previous plans he must assess the reasons ie. Was it employees:
Management: Project Control: Costing? His new business plan will be prepared
including the corrective action needed on the previous plans. The adoption of
advanced analytics like voice and search-based features, with real-time visualization,
predictive, and time saving, is considerably higher. The same applies for data
management technologies as well. Continuous advancement in data analytics are
considered an imperative for nurturing business transformation and innovation into a
customer-centric one. Voice and search-based analytics bring deeper insights into
business and help to run the business as a successful one.
Q: 1.3 Where do you see the role of a business analyst fitting into an
organization? (Dargan, personal communication, May 10, 2018).
Marketing Director: The business analyst must be in a position to constantly
monitor his plan against actual operations. Development is not only important in
business, it is important in almost all aspects of life. If we talk about business
development, in this era developing a business now totally depends on how much you
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are visible in the digital world and for that we need proper visibility through business
operations. (1) Developing a structure of website addresses on your site in the target
language, (2) Notifying the search engine which particular sub-pages are available,
(3) Analysing keywords for each language, (4) Acquiring external links leading to
your website, (5) Regularly creating interesting, professional content.
A well-thought-out strategy of developing your business on foreign markets,
combined with technical expansion of the service and building communication based
on localization, especially in the long perspective.
Q: 1.4 What are the recommendations or suggestions for analyzing the
implications of budget for projects? (Lee, personal communication, May 10, 2018;
Dargan, personal communication, May 10, 2018).
Marketing Director: The project team then goes off and documents these
requirements in the requirements specification, and from that point on, most of the
dialogue about requirements is channeled through the project manager. Then, late in
the process, the users re-engage in acceptance testing, and start pointing out all the
areas where the application fails to comply with their expectations. Analyze properly
and record everything, also I look to the past, what our company has done and what
mistakes we made to avoid any duplicate mistakes in the future to repeat, or we can
change the system really but it will cost a lot and take a lot of time to do so, which
means as from the owner side, it will be a challenge and can be risky to spend a lot.
No technique guarantees a successful outcome, but following a specific technique in a
disciplined manner has three major advantages. First, if it is applied throughout the
process, it will tend to improve the consistency and coherence of the full requirements
set and filter out extraneous and irrelevant requirements. Second, participation in
repeated requirements discussions that are run in a consistent manner according to the
chosen technique will lead users to adopt a similar discipline among themselves.
Q: 1.5 Which sector would be the search area in terms of business
development related to budgetary analysis? (Sawhill & Williamson, 2001).
Marketing Director: Network and connections are important, we need to
know people and know how to get new information from them. We also need to keep
following up with news and articles on an everyday basis, but critically if you don’t
know anyone, you can’t get a job.
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Q: 1.6 Why do you think the key strengths of budgetary control is related to
business analysis? (Lee, personal communication, May 10, 2018).
Marketing Director: A business analyst must have the following key
strengths; (1) Assess new areas of business for the company, (2) Identify new
opportunities with existing clients, (3) Minimise costs without affecting productivity,
(4) Maximise values for shareholders.
Q: 2.1 Why do you think there are different results of control after seeing
the results? (Agu, 2006).
Marketing Director: Cost control is an internal plan by a company or
government agency to keep the costs of its services as low as possible. It would
include buying the lowest cost products to use and looking for and eliminating waste
and fraud. To some degree all companies and governments do it, as do many
individuals who do not like to waste money and live within their means. There will
always be different results between theoretical and real budgets if the individual does
not have costs related to a previous similar project.
Q: 2.2 What do you think are possible ways to make sure we can maintain
the same budget in theory and reality? (Sawhill & Williamson, 2001).
Marketing Director: Projects must have all costs documented and the
Projects must be identified also, as for example
Type 1 – Mining conveyors and plant;
Type 2 – FPSOs;
Type 3 – Mining modules;
Type 4 – Tank fabrication etc.
Also, we may need to think about the employees and the system together,
and if those two things are combined well, the project could be completed
successfully and reduce the different costs of budget.
Q: 2.3 What analysis and modeling techniques and methodologies have you
found be the most effective and why? (Robinson & Last, 2009).
Marketing Director: (1) Practical experience; (2) Credibility with the client;
(3) If you have experience and credibility with the client then the project can be
discussed with both parties “listening to each other”.
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Q: 2.4 When is the most challenging period for handling the budget? And
what are your suggestions? (Smakthai, personal communication, May 10, 2018).
Marketing Director: The most challenging period is always towards the end
of a project as in many cases schedule has been delayed thus extra labour/ overtime/
equipment costs are incurred which were never allowed for in the budget.
Q: 2.5 Which factor should be the 1st priority that the company should
consider in order to prevent lost margins? (Sawhill & Williamson, 2001).
Marketing Director: As materials will be approximately 60% of the costs
then procurement is 1st priority.
Q: 3.1 What management strategy do you think is most considerable
strategy in your company for budgetary cost? (Agu, 2006).
Marketing Director: Management strategy is a major factor in the company
due to the very competitive market at this time. Management strategy should have a
solid plan and make a decision based on our history experience with the recorded
documents including the spent cost. I do not know which strategy is always correct,
sometimes we make wrong decisions, but in order to prevent that, we need to look at
the history and the documents. Management cannot just make decisions with only
their opinions especially without any evidence.
Q: 3.2 How do you think the company should prevent over-spending the
planned budget, and what are the possible solutions? (Sawhill & Williamson, 2001).
Marketing Director: I would say, record everything, record every projects
cost and check the past experience how much we spent, and then try to follow the
trend, but of course it is not easy, but I would say recording is important.
Q: 3.3 The budgetary will also effect the financial statement, which will
influence stakeholders’ investment decision making. How do you think the company
can persuade stakeholders or deal with a difficult stakeholder? (Hansen et al., 2003).
Marketing Director: Any business report prepared for the shareholders must
be genuine and not exaggerated thus in the future the shareholders will trust the
reports. Many times companies prepare exaggerated reports but after the shareholders
see the actual financial status and it is lower than the initial report, this is where the
trust is lost.
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Q: 3.4 How do you think you can establish credibility with management?
Why would you think credibility is important? (Agu, 2006).
Marketing Director: If there is no credibility with management then the
analyst serves no purpose as he cannot communicate “straight” with management.
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APPENDIX 3
Profile of interview
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PROFILE OF INTERVIEW
Mrs.Chanchira Smakthai
Position:
Educational
background:
Work experience:
Director (Assistant Managing Director)
- M.B.A. Burapha University
- B.A. of Marketing, North Eastern Technological
College
- Certificate of Director Accreditation Program (DAP),
Thai Institute of Directors (IOD) Class 89/2011
- Chief Financial Officer Certification Program (CFO),
Federation of Accounting Professions (FAP) Class
16/2012
- Anti-Corruption for Executive Program Class
13/2014
- BJC Heavy Industries Pcl.
2013-present: Assistant Managing Director – Support
BJC Heavy Industries Co., Ltd.
2009-2012: Accounting and Finance Manager
BJC Construction Industries Co., Ltd.
1995-2009: Administration and Finance Manager
Siam East Solutions Pcl.
2015-present: Director/ Audit Committee/ Chairman
of Nominating Committee
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Mr.Seong Jin Lee
Position:
Educational
background:
Work experience:
Director (Assistant Managing Director)
- M.B.A. of Chemical Engineering, Hannam
University,
South Korea
- B.A. of Chemical Engineering, Hannam University,
South Korea
- Certificate of Director Accreditation Program (DAP)
Thai Institute of Directors (IOD) Class 88/2011
- BJC Heavy Industries Pcl.
2013-present: Assistant Managing Director – Project
- BJC Heavy Industries Co., Ltd.
2006-2012: Project Manager
Mr.Dave Dargon
Position:
Educational background:
Work experience:
Marketing Director
- Kalgoorlie School of Mines
- BJC Heavy Industries Pcl.
2015-present: Marketing Director
- BJC Heavy Industries Co., Ltd.
2010-2015: Project Director
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Mr.Peter Jorn
Position:
Educational background:
Work experience:
Project Manager
- B.A. of Civil Engineering, Inha University,
South Korea
- BJC Heavy Industries Pcl.
2016-present: Project Manager
- BJC Heavy Industries Co., Ltd.
2013-2016: Assistant Project Manager
Oceana Gold
2011-2012: Project Expeditor
Sandvik Mining and Construction
2011-2011: Project Expeditor
- STX Hyukshin
2008-2011: Assistant Project Manager
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APPENDIX 4
Plagiarism checking report
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