3D30

Managing Budgets &

Resources

TEAM LEADER/SUPERVISOR
CMI 314 MANAGING BUDGETS AND RESOURCES

LIGHTHOUSE TRAINING & DEVELOPMENT LTD |

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» LEARNER INFORMATION

Learner name: CMI membership No: Date:

Centre name: Qualification:

Learner statement of I confirm that the attached completed assignment is all my own work, and does not include
authenticity: any work completed by anyone other than myself. I have completed the assignment in
accordance with the Institute’s.

 Tick here to opt out I consent for this assignment to be used for assessment standardisation and where
appropriate, for the dissemination of good practice, on the understanding that the content is
anonymised.

Signed: Date:

Centre statement of On behalf of <CENTRE NAME>, I confirm that the above mentioned learner is registered at the
authenticity: centre on a Chartered Management Institute (CMI) programme of study. The learner is, to the
best of my knowledge, the sole author of the completed assignment.

Name: Job Title:

Signed: Date:

» GUIDELINE WORD COUNT

The written word, however generated and recorded, is still expected to form the majority of assessable work produced by
Learners at Level 3. The amount and volume of work for this unit should be broadly comparable to a word count of 2000-2500
words within a margin of +10%. The excessive use of word count is not grounds for referral, however the CMI reserve the
right to return work to the Centre for editing and resubmission by the Learner.

» AIM OF THE ASSESSMENT BOOKLET

High performing individuals impact on the performance of teams and the organisation. The aim of this assessment booklet is
to enable managers to evidence their understanding of how to use their knowledge, skills and abilities to support individuals,
not only to perform well, but to exceed expectations.
 Before you begin the assessment booklet please read the CMI 314, unit specification thoroughly as only the content
related to the achievement of the assessment criteria will be assessed.
 Research the topics being assessed. Suggested reading/web resources are provided on the CMI 314 unit
specification. Your tutor may signpost you to relevant resources. Additionally, you may access excellent online
resources at ManagementDirect https://members.md.cmi.org.uk
 If you are enrolled on the Trailblazer Apprenticeship programme you are encouraged to review the Apprenticeship
Standard for Team Leader/Supervisor
Completing the assessment booklet
 The assessment booklet contains a series of tasks which are clearly referenced to the relevant assessment criteria
and indicative content.
 An appropriate referencing system (such as Harvard Referencing) must be used to ensure the original source(s) of
quotations or models can be verified.
 Finally, you must sign the Learner Authenticity statement (an electronic signature is accepted) when submitting
evidence on Quals Direct.
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» E-LEARNING

Further required learning to complete these Tasks, please log on to Management Direct
and complete the Learning Journey – Budgets and Resources

Titles covered in this course:

 Finance
 The manager’s role in finance
 Understanding financial management
 The role finance plays in business planning
 Being business smart with the numbers; knowing the score
 Alternative approaches to budgeting
 Financial ratios and external regulations
 What exactly is a balance sheet?
 Reading a balance sheet
 What exactly is profit and loss account
 Reading a profit and loss statement
 The fundamentals of financial planning

To help you to complete the tasks within this Assessment Book please
log onto your Video Arts eLearning Account and access the Level 3
Team Leader/Supervisor course. http://lighthouse.central-lms.com

Titles covered in this course:

 Finance and budgets

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The importance of managing resources in own area of responsibility
Managing resources is vital to the success and the profitability of all organisations. This task prompts you to explain the types
of resources within your own area of responsibility and what a manager needs to do to manage these effectively.

To complete Tasks 1a, b and c you are encouraged to use well-chosen examples related to a department/team relevant to the
first line manager or an area of responsibility you have researched.

» TASK

In your own words, explain the different types of resources managed within an area of responsibility.

1.1Explain types of resources managed within an area of responsibility

For this question you need to explain a range of resources that you manage. Please select three different resources which may
include goods, equipment, labour, finance, stock, facilities, IT, explain the function of the resource and how they are used, why
they are required to complete tasks.

INSERT YOUR ANSWER HERE:

Manpower/Labour: Is a resource managed by the project manager and Workshop manager.

, money, time, equipment, IT, facilities

At least 3x resources and explain function why, how, what.

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» TASK

Identify why it is important to manage resources effectively within an area of responsibility.

AC1.2 Identify the importance of managing resources effectively in own area of

responsibility
For this question you need to identify why it is important to manage resources effectively in your area of responsibility, how do
you manage resources and what are the consequences of not effectively managing these resources this may include the
continuity of supply, prevent overspend and over production, prevent shortages, quality of supply.

INSERT YOUR ANSWER HERE:

What would happen if we didn’t manage manpower

What would happen if we didn’t manage budget
How we manage above

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» TASK

Explain TWO (2) methods you might use to achieve value for money when managing resources.

AC1.3 Explain methods used to achieve value for money when managing resources
For this question you need to explain two methods used to achieve value for money when managing resources. First identify
the method which may include negotiation, discount, bulk buying, seek alternative suppliers, added services and benefits then
give an explanation of the method and in what circumstance could they be used effectively.

COMPLETE THE TABLE BELOW:

1. Alternative supplier. For work we overhaul diesel engines. One method we use to reduce costs is to use aftermarket
parts. Genuine components from OEM’s tend to be quite expensive and can make engine overhauls uneconomical for
the client. To this end there is components available on the aftermarket. We have a range of suppliers who have been
through our quality approval process and are competitively priced. We have found there is a lot of cheaply made
products available which if they were to fail could possibly cause catastrophic damage to the engine. For us it is not
necessarily about the cheapest product we can purchase, we look for a complete package of reasonable price, service
and quality of components.

An example of this is we have just purchased a replacement crankshaft for an engine, a crankshaft from the OEM is
£13,500 for a re, an aftermarket crankshaft from our trusted supplier is £3,500. This is a £10,000 saving. We confirmed
the quality of the aftermarket crankshaft by asking questions regarding the quality procedures, material used and
hardening process. It came to light that this supplier produces the crankshaft for the OEM, when it arrived it had the
OEM markings in the forging and had the OEM logo machined out.

2. There are times when we do have to use genuine OEM parts only on engine builds at the request of the client. For times
like this we have negotiated special terms with the OEM in order to be competitive. Not all customers like to use the
OEM to overhaul their engines, the OEM is too big a company and cannot provide the level of personable service as a
smaller firm are able to, and sometimes this is what the customer requires.
In light of this we negotiated a special discount that was suitable for all parties, with us being given a 25% discount, we
then proceed to give our customer a 10% discount and everyone is happy.

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Understand how to manage costs within a budget
An important role of the manager is to understand the types of budgets and their use within an organisation, the importance
of operating within a budget and the policies and procedures that inform the management of budgets.

To complete Tasks 2a, b, c and d you are encouraged to use well-chosen examples related to a department/team relevant to the
first line manager or an area of responsibility you have researched.

» TASK

Budgets are an important part of planning the finances needed to support business activities. An organisation may have
different budgets which will all feed into an overall “Master” budget.
Using examples, outline the purpose of a budget in an organisation.

AC2.1 Outline the purpose of a budget

For this answer you need to ensure that you first define what a budget is and then explain why they are used within business
this may include meet team objectives, control expenditure, use of resources, accountability, delivering, planning,
expectations of performance

INSERT YOUR ANSWER HERE:

We have a budget to ensure the profitability of the company. There are set monthly costs the company must pay and formulates
as part of the master budget, this is staff wages, building costs, electricity bills etc. I do not deal with these budgets they are
dealt with by a higher power.
My control is of individual project budgets. We have a total value of which we have quoted the customer to complete the
project. Within the quote we do input caveats as there may be costs which haven’t been accounted for caused by worn parts of
which we would not usually find to be worn.
The total value of the quotation creates the “master budget”. We aim to make 40% profit with a minimum of 15%, this margin is
dependent on the type of engine, the if we encounter a fault of our own doing (one such example of this is an engine we
overhauled and we made an error with the engine control system which unfortunately counteracted the profit from the
project). We have a cost control spreadsheet of which is updated regularly as costs are incurred. We also aim to reduce costs
using this spreadsheet also, as there are occasions, we locate parts of better value which we couldn’t at the time of purchase, or
sometimes components we thought might require replacement do not require replacing.

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» TASK

Using the table below, identify TWO (2) types of budget and explain how each of these types is used within an organisation.

AC2.2 Explain the types and use of budgets within an organisation

Types may include but are not limited to master, operating, expenses, departmental, functional, capital and cash budgets

COMPLETE THE TABLE BELOW:

Type of budget Explanation of how the budget is used within the organisation

1. Master Budget A master budget is an agglomeration of a company's individual budgets. Designed

to display a complete view of its financial health and activity. The master budget
amalgamates factors like sales, operating expenses, assets, and income streams to
allow companies to evaluate their goals and overall performance, as well as that of
singular cost centres within the organization. Master budgets are regularly used in
large companies to keep all managers aligned.

2. Cashflow Budget A cash flow budget is a mechanism of projecting how and when cash enters and
exits a business within a specified time period. It can be effective in helping a
company determine whether it is governing its cash wisely. Cash flow budgets
analyse factors such as accounts payable and accounts receivable to determine
whether a company has sufficient cash on hand to continue operating, the extent
to which it is using its cash productively, and its likelihood of generating cash in the
near future. for example, My company might use its cash flow budget to determine
whether it can expand the business and start an engine test cell project to expand
the business before getting paid for the work it has in progress.

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» TASK

Running a team or departmental budget requires first line managers to carefully plan and review expenditure. All managers
need to understand the consequences of operating outside a budget.”
Explain why it is important to operate within a budget.

AC2.3 Explain the importance of operating within a budget

Importance refers to financial management processes and compliance procedures within the organisation and may include
but is not limited to financial viability, ability to pay staff, invoices, suppliers, reputation, collective responsibility, recording
payments and expenditure, timeliness, limits of authority

INSERT YOUR ANSWER HERE:

It is important for a business to always operate within a set budget. Failure to do so will incur debt and repayment charges will
badly effect the day to day running of the business. Suppliers will not allow credit accounts to be opened due to bad credit
ratings, this will affect cash flow as supplies would require to be paid for upfront. Should there be delays in payment from
customers this will result in an inability to pay wages, bills etc.
If a business operates within its budget, suppliers are paid on time, credit ratings are kept in good order enabling the business to
take advantage of delayed payment terms with suppliers, there will be sufficient funds to put into staff training or expansion of
the business, staff will be paid on time et.

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» TASK

Using examples, explain how policies, procedures and other forms of organisational governance inform the management of
budgets.

AC2.4 Explain how organisational governance informs the management of budgets

For this answer you must demonstrate that you understand the link between where budgets are set (organisational
governance) and how they can then be used. If possible use an example from the workplace for example capital bids processes
for large purchases or the issuing of yearly budgets.
Organisational governance refers to the application of compliance requirements (e.g. policies and procedures) to ensure
effective budget control and may include but are not limited to budget approval process, legal structure, limits of authority,
ethics, guidelines on procurement, recording, reporting, response to external factors (e.g. inflation), attitude to risk,
contingency planning, monitoring, revision processes

INSERT YOUR ANSWER HERE:

Budgetary governance is the process of developing the annual budget. It advises of overseeing its implementation and ensuring
its alignment with company goals.
Our Budgetary Governance sets out ten fundamentals which give an summary of practices across all budget activity and aim to
offer practical guidance for implementing and improving budget systems to form a positive impact on the business.

1. Manage budgets within clear, conceivable and predictable limits for budgetary policy.
2. Align budgets with the medium-term strategic priorities of the business.
3. Design the budgeting framework in order to meet business demands in a cost-effective and coherent manner.
4. Ensure that budget documents and data are filed and accessible.
5. Provide opportunity for an inclusive and participative debate on budgetary choices.
6. Present a comprehensive, accurate and reliable account of business finances.
7. Actively plan, monitor and manage budget achievement.
8. Ensure that evaluation and value for money are integral to the budget process.
9. Identify, assess and manage longer-term sustainability and growth of the business.
10. Helps promote the integrity and quality of budgetary forecasts, through rigorous quality assurance inclusive of
independent audit.

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Understand how to manage costs within a budget
An important role of the manager is to understand the types of costs within a budget, the sources of information that are
used to identify costs in a budget and their limits of authority when managing costs within a budget.

To complete Tasks 3a and b you are encouraged to use well-chosen examples related to a department/team relevant to the first
line manager or an area of responsibility you have researched.

» TASK

Using the table below, explain THREE (3) types of cost within a budget and identify the source of information for each cost
identified.

AC3.1 Explain the types of costs within a budget; AC3.2 Identify sources of information on
costs in a budget
Types may include but are not limited to fixed costs: rent, loans, taxes, salaries, equipment; variable: materials, consumables,
travel, postage; semi-variable: telephone, mobile, utilities, internet
Sources may include but are not limited to purchase orders, invoices, budget statements, receipts, timesheets, supplier
catalogues and brochures.

COMPLETE THE TABLE BELOW:

Type of cost Sources of information

1. Fixed costs – are business expenses Lease contract for rental of building, Budget statement, Utilities statement,
which are not dependent on the level telephone bill, salary.
of services or goods produced by the
business.

2. Variable costs – this is a cost that Our variable costs are parts required for jobs. Each project is bespoke to the
changes as the quantity of the services application, with no work scope ever being a repeat. With this, costing of parts
and or goods that a business produces is always variable.
changes.

3. Semi-variable costs – also known as a
semi-fixed cost or a mixed cost. Costs
are fixed for a set value of
consumption or value, once this set
value is exceeded the cost becomes a
variable.
An example of this, electricity costs a factory £1000 per month just to keep the
lights on and the building to function at a base level. However if production
were to double requiring additional machines to run which in turn uses
additional electricity the cost may increase to £1800.
The above scenario can also be used to describe slight fluctuations in salary
costs.

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» TASK

Identify TWO (2) systems that can be used to manage costs within a budget and give reasons for use.

AC3.3 Identify the systems used for managing costs within a budget
Systems may include but are not limited to spreadsheets, files, accounts software, enterprise systems

COMPLETE THE TABLE BELOW:

Type of system Reasons for use

1. Excel Spreadsheet We use excel spreadsheets for various reasons, one such reason is to keep an
eye on budget costs. Excel as a program is an extremely versatile and powerful
piece of software, for which smart v lookup systems can be written, as well as
calculations with auto filling. Graphs can also be created to show profit/loss
etc.

2. Gantt Chart (Microsoft Project) When used properly and all information fields are filled in, this system can be
used to also control budgets within a project. The information can easily be
exported to an excel spreadsheet or just create a printable report, again this
can also include graphs and charts, as well as basic numerical tables.

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Monitoring and controlling a budget in own area of responsibility
When managing budgets, it is unlikely that all actual costs are the same as the budgeted costs. It is important that all
differences are investigated and a manager is clear about the actions that need to be taken (within their limits of authority) to
manage the budget effectively.

To complete Tasks 4a you are encouraged to use well-chosen examples related to a department/team relevant to the first line
manager or an area of responsibility you have researched.

» TASK

Using examples, explain TWO (2) methods for monitoring a budget.

AC4.1 Explain methods for monitoring a budget

For this answer you are required to explain two methods for monitoring a budget. What they are and how they are used, this
could also include which method is better in a given situation. Method of monitoring budgets refers to actual versus forecast,
calculation of variances (e.g. mix, volume, labour, materials), cost tracking, trend analysis.)

INSERT YOUR ANSWER HERE:

1. Using an excel spreadsheet is useful for managing budgets. I use this spread sheet to manage budgets for projects, an
example of which is:

Project Cost
Control - Overhaul.xlsx

2.

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 » SCENARIO

You are working as a first line manager in an organisation. You have responsibility for managing the team’s budget and have
received the following budget update from the finance department.
Controlling costs is very important to the profitability of an organisation. Having reviewed the budget that was given to you by
the finance team, you have identified a range of actions that you would like to take to control it. However, the organisation’s
finance policy limits the decisions that can be made by a first line manager regarding the management of budgets.

To complete Tasks 4b, 5a, 5b and 5c you may choose to use this scenario to support your answer. Alternatively, you may refer to
your own experience of managing a budget within an organisation.

» TASK

Outline TWO (2) actions you would take to control a budget.

AC4.2 Outline the actions to take to control a budget

COMPLETE THE TABLE BELOW:

1. kpi

2. Procurement rules

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» TASK

Using an example, explain the limits of authority of a first line manager when managing costs within a budget.

AC3.4 Explain limits of authority when managing costs within a budget

For this answer you need to provide some explain of why organisations have limits of authority when managing costs within a
budget. Limits of authority refers to approval levels (e.g. monetary amounts, authorisation, sign off.

INSERT YOUR ANSWER HERE:

» TASK

As the budget holder, you are very concerned about one area of overspend on the budget. In your own words, identify a
process you would use to escalate problems and changes to a budget.

AC4.3 Identify a process to escalate problems and changes to a budget in own area of
responsibility
Using the scenario above, identify two of the expenditures above (Salaries, Travel, Stationary, Equipment and Materials) and
explain what actions you would take to ensure that the Actual £ was closer to the Budget £
Actions may include but are not limited to responses to under and over spend, chase up sales orders, unpaid invoices, delay
purchase of new equipment, cost cutting, review resources, communicate cost awareness

INSERT YOUR ANSWER HERE:

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» APPLYING THE LEARNING – OFF THE JOB ACTIVITIES

Recognising your Off the Job Learning Activities

Workshop (lighthouse logs this) 7 Hours

Post Course CMI Management Direct Resources 5 Hours
LMS resources 4 Hours

Following the completion of your workshop there are some activities that we ask you to
complete to build your portfolio of skills evidence. Please complete these activities and
submit the evidence with your assessment book.

Post Workshop Activities 12 Hours

TASKS
The tasks required to demonstrate your use of budgets and resource are within your
project management assessment book.

The research and time you have spent completing these tasks can be used as your Off the
Job hours to be added to your Learner Journal on Quals Direct. Remember it is the time
you spend doing the activities within the workplace and not how long you have spent
writing them up. In addition to the work for your assessment evidence we have some
suggestions of areas you could add to your Learner Journal on Quals Direct to contribute
towards your hours these are listed below:
 Complete your reflections of Action Logs from workshop.
 Complete reflections on the types of budgets and resources you encounter within
your role. What are the biggest commodities within your organisation?
 How do you use resources efficiently, do you have targets or budgets that you can
or cannot exceed – for example rotas or delegation of work?
 Does your organisation use reporting systems to update stakeholders on the use of
resource and budgets? How is this communicated and what impact does it have?
 When there are budget or resource issues what leadership styles do you need to
demonstrate to ensure that the operation continues to function?
 Identify behaviours of self and others, how have the following been demonstrated;
taking responsibility, agility, professionalism and inclusivity. Give examples of the
situations that demonstrate these behaviours.

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