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COSTING AND FINANCIAL MONITORING SYSTEM Submitted by Prasoon Raghuwanshi

Faculty Guide: Prof. S.K Mitra HOST ORGANISATION: HUNNAR SHAALA FOUNDATION FOR BUILDINGTECHNOLOGY & INNOVATIONS BHUJ-KUTCH

OTS (PRM 2003-05)

INSTITUTE OF RURAL MANAGEMENT, ANAND 2004

ACKNOWLEDGEMENTS My traineeship at Hunnar Shaala has given me the opportunity to understand the organisation in its entirety. It has given me valuable insights in application of theoretical knowledge. Above all it provided me with an opportunity to understand the practical aspects of working of an organization. I would like to thank •

Sandeep Bhai and Mahavir Bhai, for providing me a task, which could not have been accomplished without the integrated effort of all the staff.

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The project staff – Vinod Rabadiya, Raj Ranpura and Bharat Bhai for their wholehearted support in the completion of the work.

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The Rammed earth, Block production staff – Tejas Kotak for his cordial support.

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The Administrative staff – Raghvendra Singh and Kamlesh Bhai, for patiently responding to my queries, and for willing to adopt and learn a new set of rules and procedures.

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Prof. S K Mitra, for his help and guidance.

In short, I would like to thank the entire Hunnar Shaala community, for making my organisation traineeship segment comfortable and a learning experience.

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EXECUTIVE SUMMARY I II III IV V

Student’s Name Organization Reporting Officer Faculty Guide Project Title

: : : : :

Prasoon Raghuwanshi Hunnar Shaala Mr. Raghvendra Singh Prof. S.K Mitra Costing and Financial Monitoring System

Objectives: 1. To develop a costing system for proper allocation and assignment of resources. 2. Implementing a financial monitoring system for project status tracking that includes developing spreadsheets for project tracking system and Gantt charts for project planning. 3. Integrating information from the tracking system of project and providing stage wise summarized reports. Scope of the Study: Hunnar Shaala and project sites Methodology: Interviews with department heads, project team and group discussions with all the related staff. Major findings: 1. A Project planning exercise to determine the amount of raw material and schedule was accomplished for the existing project. 2. A project tracking system for stage wise project tracking may help the project team to timely monitor the overruns in both aspects of time and cost. Further, a monitoring system will help in effective use of the information that is generated, for more informed decision-making. 3. Implementation of the entire system (set of rules and procedures) to project team was achieved. With the responses, appropriate changes were incorporated in the system. 4. Allocation basis for administrative component were provided for costing the projects appropriately. 5. A database in Ms-Access was designed for integrating information from the system and providing stage wise summarized reports of project monitoring. Recommendations: 1. The statements, time sheets and the spreadsheets must be maintained regularly by all the people involved according to the stages specified, for the system to be effective. Responsible persons for project should monitor the up to date maintenance of all the actual data from the project site to provide regular information to the decision makers. 2. The project planning exercise must be done for every project and reasonable assumptions have to be taken for the plan to be effective and successful. 3. Top management and departmental heads should ensure the timely record and maintenance of information by reviewing the project status on the completion of every stage of the project. 4. Proper allocation of administrative overheads is the necessity to avoid under/over costing of the project. 5. In the long run a record system should be arranged to trace the direct cost instead of pooling it in administrative overheads.

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Table of Contents 1. 2.

HUNNAR SHAALA: AN INTRODUCTION............................................................1 HUNNAR SHAALA ORGANIZATION STRUCTURE AND RESPONSIBILITY ACCOUNTING CENTRES........................................................................................2 3. HUNNAR SHAALA PROJECT IMPLEMENTATION SYSTEM.............................3 4. REVISED PLANNING PROCESS OF PROJECT IMPLEMENTATION.................5 5. COSTING SYSTEM...................................................................................................6 5.1 Raw Material..............................................................................................................6 5.2 Labour: Direct and Indirect........................................................................................6 5.3 Administrative Overheads..........................................................................................6 6. FINANCIAL MONITORING PLAN........................................................................10 6.1 Data Requirements...................................................................................................10 6.2 TRACKING OF DATA............................................................................................11 6.4 VARIANCES...........................................................................................................12 6.4.1 Cost Variance.............................................................................................12 6.4.2 Time overrun..............................................................................................13 7. FINANCIAL MONITORING OF SRE/BLOCK PRODUCTION DIVISION.........16 8. CONCLUSION..........................................................................................................16

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List of Annexure 1. 2. 3. 4. 5.

Budget Statement………………………………………………..18 Actual expenses statement………………………………………19 Time Sheet………………………………………………………20 Variance Statement……………………………………………...21 Budgeted estimation, actual expenses and variance ……………23

List of Figures 1. Workflow of activities………………………………………..14 2. Gantt chart……………………………………………………16

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