Analyse the different organisations in the public sector
Most of the organisations whether they belong to the public or private sector exist in order to a achieve one or the other objectives, while the exact nature of the objective may vary considerably depending on the organisation with in the manner they pursue but one of the feature seldom varies, the resources available are never sufficient to permit the achievement the achievement of the every desired aim of the organisation. Thus it is not sufficient to merely decide on its objectives but also to make a proper plan to accomplish the target to achieve it. Public sector organisations are accountable directly to the parliament i.e. the national industries, public corporations, non departmental public bodies including the National Health Services Trust and their authorities are accountable for the sponsoring government departments .The Board objectives are set by the parliament and certain services such as social and education board should provide a minimum standard which is imposed by the parliament .
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Local pressure groups such as trade unions, community groups have definite effect on the direction of local affairs. On the other hand fundamental way of distinguishing between the public sector organisation is the way in which they are financed. It usually depends on the economic nature of the goods and the way the service is provided.
In the forward to the White Paper "The NHS Plan: A Plan for investment, a plan for reform" (Department of Health, 2000) Tony Blair set out New Labour's project of modernising the NHS in England through a combination of investment and reform. After a period of sustained underinvestment in health services the NHS Plan detailed how additional funding would expand hospital resources. Funding provided by the government to the NHS was set to increase in real terms by 7% per annum over a 5-year planning period. This commitment, it was argued, would reduce uncertainty and facilitate medium term planning in the NHS. Any extra funds would also be coupled to reform(s) to ensure that finance converted into additional hospital productivity and capacity to treat patients.
In the forward to The NHS Plan (Department of Health, 2000), the Prime Minister outlined the governments' financial commitment to the NHS.
Assess the accountability of the public sector managers in relation to finance.
A manager has to plan the required and implement the planning process .However, just planning the things will not work out to ensure the desired results but it has to be implemented appropriately and it should be in their control. The manager should know about the costing techniques such as job costing, batch costing joint product and by product costing etc .However the basic principles underlying the various techniques are essentially same for both the private and the public sector. The role of a manger involves dedication towards the work and makes people more aware of the situations which need to be face d to achieve the required targets. An effective managerial planning and control system is essential requirement of the public sector organisations. So management accounting has a crucial role to play in the market by providing the proper information which is intern necessary to operate a system smoothly. Information is needed at the control stage, it measure the effectiveness of the organisation in achieving its desired objectives.
Analyse the financial information reported for the different public sector organisations.
Financial planning is related to the process of investment as to ensure that the consequences of fulfilling the fundamental aims and objectives of the public sector organisations, and meeting the outcomes as early as possible. The financial reports will be provided to the parliament in order to sanction the funds and this will be presented during the budget session every year. The cabinet decides the overall costs for the public expenditure and the negotiations takes place between the treasury and the concerned departments. After the agreement it will lead to pre budget Announcement
The NHS Plan clearly links investment with reform. Without reform, it is argued, additional investment will not necessarily translate into additional capacity to treat patients. This connection between investment, reform and capacity is elaborated through a series of illustrations in the NHS Plan. For example, investment in wages and salaries is associated with modifications to employee relations and working practises that in turn will be expected to increase NHS productivity and thus drive up capacity to treat patients. Working in partnership with the private sector would help to financially underwrite new capital projects that would also expand and modernise physical capacity.
2.1 Analyse the financial information available and evaluate its use for decision making and control.
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Financial planning is related to the process of investment appraisal in order to fulfilling the aims and its objectives of the public sector organisation. Expenditure is analysed by the major programmes of each department by the type of spending authority and by economic category, it is important because each individual public sector organisation has to undertake its own medium term financial planning exercise to ensure that its fits in with the spending plans of the government .Organisations that receive funding in the form of government grants can plan their activities for at least three years which is covered in the Departmental reports. Capital budgets contains the details of the estimated receipts from the sale of assets such as council houses and the acquisition of new non- current assets. The whole system of budgeting and budgetary control should be considered with the amount of evidence about its behavioural effects (Otley,1977). Bugeting provides a consistent behaviour of the organisation whether is it performing its objectives or not. However, the behaviour of the organisation is dependent on the actions of the individuals involved in reaching its objectives. Budgets can have an enormous impact on the managerial behaviour .However; they are traditionally been concerned with the financial measures. Some non financial targets and indicators will be required to make a judgement on the effectiveness of a service and easy to measure with the consequence that they are aspects of the service. That will be concentrated and the less measurable elements usually suffer.
2.2 Assess the Areas to be monitored and demonstrate how this can be achieved.
The Managers should assess at all levels for the welfare and growth of the organisations i.e. with a clear view of the objectives, and measure outputs or performances in relation to the objectives. He should be responsible in making the best decision to utilise the resources, including the output and value for the money. The manager has to monitor the areas of weakness so these can be addressed quickly, whilst at the sometime ensuring continuous improvement to all the services. An Outcome of each review will therefore be the performance targets and an action plan showing how the targets are to be achieved. The performance plans should involve the strategies of deliverance, the levels to which services are currently delivered, the levels of the service that should be expected in the future and finally action which is taken to deliver these standards within the expected time.
The fundamental performance reviews are meant to challenge the service, invite comparison with national indicators ,involve consultation with the local communities and embrace competition.
2.3 Analyse the different types of financial decisions to be made and demonstrate techniques to support the decision making.
A specific Manager should be clearly responsible for the operation of the programme, it should have a well defined and measurable impacts. In Order to analyse the financial decisions in the public sector various factors were considered i.e.: responsibility (high or low), decision alternative (reserve fund or other sponsor), decision framing (positive or negative), and mood (positive or neutral). In contrast to previous research, it was demonstrated that following a setback, some decision alternatives elicited escalation among low-responsibility decision makers. Other decision alternatives elicited escalation among high-responsibility decision makers. This interaction between personal responsibility and decision alternative was also moderated by the manner in which decision feedback was framed. for example, to ensuring that public moneys are expended appropriately and properly accounted for. However, most public sector institutions including museums, libraries, universities, hospitals and art galleries are established to provide services to the public. The effective financial management of such entities within their prevailing organisational contexts is not for the purpose of delivering purely financial returns and outcomes, but to enable them to pursue their social objectives with greater effectiveness and efficiency. A hospital that is well managed in financial terms cannot be presumed to be meeting a community's needs for health care.
. Likewise, the standing of a university will derive from the quality of its education and research programs rather than be gleaned from results or trends revealed by its statements of financial position and performance.
3.1 Determine the process by which projects are put to tender.
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The process which allows the organisation to set out their requirements and allows the supplier to submit offers to the tender showing how they intend to meet the required criteria ,It also shows the amount charged by the different suppliers ,however it is not necessary to award the contract to the lowest bidder. Value for money is very important .For example recently Virgin group chairman lost his bid on west midland region because the First group overtook them by bidding with more money and providing extra trains with lower prices.
The proposal management is an elaborate, critical process for a generic make-to-order company which designs and develops complex products and services. Unsuitable management of the proposal phase can lead to miscommunication, misallocation of resources, and in many cases missed contract opportunities. This fact is mainly due to the characteristics of the proposal process:
â€¢ It is often based on the forecast for the utilization of material and immaterial resources;
â€¢ It is based on quantitative and qualitative variables which are in many cases discordant;
â€¢ The proposal must consider:
â€¢ The product on sale,
â€¢ The correlated services,
â€¢ Design and accomplishment timing,
â€¢ Policies involving and subcontracting suppliers and
â€¢ Places where the intervention must be made (i.e. plant installation), availability of logistic services and infrastructures.
â€¢ It is often impossible to know or estimate the proposals of the competitors;
â€¢ A preventive negotiation is often not applicable (i.e. public tender for contract);
â€¢ The proposal cannot be modified after knockdown and is binding for the next phases;
â€¢ Money penalties may be present in the contract;
â€¢ Each case-job is different.
By integrating the process of prioritizing, estimating, and engaging services, it is possible to obtain the information needed for the proposal management, prioritize opportunities, and estimate costs and scope of the project
3.2 Analyse how public sector tenders are evaluated and suitable suppliers are selected.
â€¢ Analytic indicates that the problem is broken down into its constitutive elements.
â€¢ Hierarchy indicates that a hierarchy of the constitutive elements is listed in relation to the main goal.
â€¢ Process indicates that data and judgments are processed to reach the final result. The AHP methodology has been widely utilized in various fields: software selection problems, economic and management problem solving, plant location selection, supplier selection, evaluation of project termination or continuation, based on the benchmarking method, selection of the best alternative between different outsourcing contracts in terms of maintenance services, and so on.
The AHP is constituted by two phases:
the hierarchy tree definition;
the numerical evaluation of the tree.
The hierarchy tree definition starts from the determination of the proposed goal, then criteria and sub-criteria are defined using the experience of the experts; finally, the alternatives known a priori represent the leaves of the tree.
The evaluation phase is based on pair-wise comparison. The criteria on the same level of the hierarchy are compared to establish relative importance compared to the criterion of the father-level. This process permits to (i) obtain values that weigh criteria, and (ii) define a ranking of the alternatives. The evaluation is bottom-up: the decision-making process starts by comparing the alternatives with the criteria of the last level; the evaluation continues up to the criteria of the first level, which are then compared to the goal.
In public work contracts, the written offer proposed (with relative documents) represents the only method for a company to participate in and win a contract. Other data related to the tender of the contract are often not available, and the competitors and their proposals are unknown. Besides, many aspects must be taken into consideration when drafting the proposal. Therefore it is useful to adopt the AHP to define a complete hierarchy tree of the variables and criteria involved. Generally, in the tender for a public work contract the maximum admissible amount is reported. Therefore, the main objective of the company is to establish an adequate discount considering that (i) the price proposed in the offer cannot be increased once the company has won the contract, and (ii) the lesser uses suitable systems to reject anomalous proposals with a large percentage of discounts.
A more precise evaluation of the percentage of discount to be applied becomes necessary to (i) try to win the contract, or pass the first cut at least, and (ii) make a reasonable structured evaluation of the proposal, with a correct estimate of the variables involved, in order to make a profit.