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Using your present organisation (or one you are familiar with) as an example describe a process for creating and approving an annual budget for supplying facilities management (FM) goods and services to that organisation

Price is for 6000 words

ASSESSMENT

FM4.07 UNDERSTANDING FINANCIAL MANAGEMENT IN FACILITIES MANAGEMENT

Credit Value: 6

Maximum word count for this unit:         6,000 words

The following assessment tasks have been designed to enable you to demonstrate your knowledge and understanding of this unit. 

All tasks must be completed

It is an important aspect of the assessment that you are able to demonstrate the application of acquired knowledge to appropriate examples of facilities management.  You should therefore read the individual tasks carefully in conjunction with the relevant assessment criteria in the unit specification. Where practical examples are required by a task you must provide them in your answer. You should also pay careful attention to the additional guidance (shown in red italics) in the unit specification as this indicates the appropriate level of knowledge required to successfully demonstrate the assessment criteria.

Each task shows the Learning Outcomes(s) and Assessment Criteria in the unit specification that the task has been designed to assess.  You should answer each task as it has been set.  Compare your answer for each task against the assessment criteria shown to ensure that they have been fully addressed by your answer(s).

Individual tasks must be completed within the word count shown.

(NB. The word count limits shown for individual tasks are provided to ensure that they receive appropriate weighting in your assessment.  Please note however that word counts are a limit and not a target).

Task 1 – Facilities management budgets

This task addresses parts of Learning Outcomes 01 and 02.  Your answers must address the Assessment Criteria  in the following table

Unit

Learning Outcome

Assessment Criteria

FM4.07

01

1.3,

FM4.07

02

2.1, 2.2

 

FM4.07 UNDERSTANDING FINANCIAL MANAGEMENT IN FACILITIES MANAGEMENT

Task 1 comprises two questions:  You may address questions separately or combine them into a single answer for this task.  Your answer in either case must fully address the assessment criteria in the table shown above.

Word count limit:  1,600

  1. Using your present organisation (or one you are familiar with) as an example describe a process for creating and approving an annual budget for supplying facilities management (FM) goods and services to that organisation (or a particular cost centre within it).  Your description must include the following:
  • How capital and revenue expenditure will be identified and separately budgeted for (by reference to specific examples of goods or services).
  • How you would use a combination of cost-based (or incremental) and zero-based budgeting techniques to develop the FM budget (by reference to specific examples of goods or services).

2. Explain how “cost centres” are (or could be) used for budget management within FM.  Use FM examples to explain how direct and indirect costs are distinguished from each other.

Task 2 – Managing cash flow

This task addresses part of Learning Outcome 02 and the whole of Learning Outcome 03.  Your answers must address Assessment Criteria 2.4, 3.1 and 3.2.

Unit

Learning Outcome

Assessment Criteria

FM4.07

02

2.4

FM4.07

03

3.1, 3.2


Task 2 comprises three questions
:  You may address questions separately or combine them into a single answer for this task.  Your answer in either case must fully address the assessment criteria in the table shown above.

Word count limit:  1,600

  1. Using your present organisation (or one you are familiar with) as an example, provide an overview of how the cash flow associated with the use or consumption of facilities management (FM) goods and services is managed (including, for example, purchase orders, invoice processing).  What controls are (or could be) used to prevent fraud or irregularity?
  2. Using FM examples, explain the effect of fixed and variable costs on cash flow.  What additional information would you use for making cash flow projections for the FM budget?
  3. Your latest “budget versus actual” FM expenditure position reveals a number of variances (including over-spend and under-spend) against several budget items.  Explain different options available to you to remedy the variances.  What are the advantages and disadvantages of these options (including their effect on FM budget and service provision)? 

Task 3 – Financial cases

This task addresses the remainder of Learning Outcome 02 and the whole of Learning Outcome 04.  Your answers must address Assessment Criteria 2.3, 4.1 and 4.2.  

Unit

Learning Outcome

Assessment Criteria

FM4.07

02

2.3

FM4.07

04

4.1, 4.2


Task 3 comprises four questions
:  You may address questions separately or combine them into a single answer for this task.  Your answer in either case must fully address the assessment criteria in the table shown above.

Word count limit:  1,700

  1. Identify an example of a fixed asset.  As facilities manager you propose to purchase this asset for your organisation.  However you do not have approved funds in your present budget. 

Prepare a financial case for the approval of additional funds to make this purchase in the present budget period.  Your answer must clearly demonstrate the full costs associated with this acquisition together with the benefits (both tangible and intangible) that you expect it to deliver.  Your financial case must include other options (including a “do nothing” option) for comparison purposes.    Explain why your example is classified as a “fixed asset”.  How is the value of fixed assets managed in financial accounts?  How does the value of fixed assets affect an organisation’s liability for Corporation Tax?

2. Your finance director wants to know how soon the benefits from this purchase will pay for (or off-set) the initial outlay.  Describe a suitable investment appraisal technique for this purpose and how you would use it for your particular example.

3. Your finance director also wants to know the net present value (NPV) of your proposal to satisfy herself that this purchase represents a suitable investment.  Explain the term “net present value”.  What investment appraisal technique could you use to compare the NPVs of the different options given in your financial case?


Task 4 – Financial reports

This task addresses the remainder of Learning Outcome 01.  Your answers must address Assessment Criteria 1.1 and 1.2.  

Unit

Learning Outcome

Assessment Criteria

FM4.07

01

1.1, 1.2


Task 4 comprises two questions
:  You may address questions separately or combine them into a single answer for this task.  Your answer in either case must fully address the assessment criteria in the table shown above.

Word count limit:  1,100

  1. Describe the function and purpose of the following financial reports:
  • Profit and Loss Account
  • Balance Sheet
  • Cash Flow Statement

b. Describe how the information presented by these reports affects business planning for the facilities management function, in particular capital expenditure and revenue expenditure.

Word count summary

Task

Word limit

Task 1

1,600

Task 2

1,600

Task 3

1,700

Task 4

1,100

Maximum word count for unit

6,000

FM4.07 UNDERSTANDING FINANCIAL MANAGEMENT IN FACILITIES MANAGEMENT


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