Cost Benefit Analysis...

Cost Benefit Analysis Cost benefit analysis (CBA) is a tool which is used for the determination of the worth of a project, programme or policy. Its principles and practice are well established and widely used. Organizational management normally uses this tool to appraise a project before taking an investment decision. The decision to conduct a CBA for the project alternatives and the manner in which it is to be conducted is usually taken since it helps the management in making judgments and appraising available options. CBA is a systematic approach for the estimation of the strengths and weaknesses of alternatives and is used to determine options which provide the best approach to achieve benefits from the project. It is the comparison of costs and benefits of the project to decide whether it can be undertaken. In CBA both the tangible and intangible costs as well as tangible and intangible benefits are considered. CBA is a term that refers both to (i) a formal discipline used to help appraise, or assess, the case for a project, which itself is a process known as project appraisal, and (ii) an informal approach to making decisions. Under both definitions the process involves, whether explicitly or implicitly, weighing the total expected costs against the total expected benefits of the project or its alternatives in order to choose the best option. The idea of this economic accounting originated with Jules Dupuit, a French engineer whose 1848 article is still worth reading. The British economist, Alfred Marshall, formulated some of the formal concepts which are at the foundation of CBA. But the practical development of CBA came in 1936 when the regulatory act required US Corps of Engineers to take up only those projects for the improvement of the waterway system...

Management of Financial Resources for Sustained Success...

Management of Financial Resources for Sustained Success  Financial resource is a very important resource which an organization needs not only for its functioning  but also for its sustained success. For this purpose the organization need to have systems in place that help it to both fund its ambitions and also to manage its financial resources in support of its daily operations, including funding for improvement activities. Normally financial controls are applied by the management which enable it to take a proactive management position in the business. The three most important financial controls are namely (i) the balance sheet, (ii) the profit and loss statement, and (iii) the cash flow statement. But the management of financial resources is much more than the exercising of the financial controls. The management of the financial resources is an important function of the management in the organization. This financial management starts with the financial planning. Financial planning is a continuous process of directing and allocating financial resources to meet strategic goals and objectives. The output from financial planning normally takes the form of budgets. Financial planning works from the strategic and business plans to identify what financial resources are needed to obtain and develop the resources to achieve the goals in the two types of plans. Typically, financial planning results in very relevant and realistic budgets. Financial planning normally starts at the top of the organization and has basically two components namely (i) planning for operations, and (ii) planning for financing. Operating people focus on production and sales while financial planners are interested in how to finance the operations. Financial planning is the process that encompasses both operations and financing. In a normal organization, typical financial functions within an organization are a host of the accounting activities such as...