Core Activity B - Implement senior management decisions Flashcards
How might an organisation Implement strategic change?
Via a change programme
Whats the definition of a project?
‘A unique set of processes, consisting of coordinated and controlled activities, with a start and end date, undertaken to achieve an objective’
What unique set of process might Flathall come against when preparing for a project?
Dealing with planning application
Dealing with institutions
Reassuring the general public
Reassuring Environmentalists
Communicating with local businesses
What are the 4 main project constraints ?
Quality
Impacted by ….
Time
Scope
Cost
What are the four phases of project management ?
Initiation phase
Planning phase
Execution and control phase
Close & Review
What need to happen during the initiation phase?
Produce a PID to include…
Justify the Objective, deadline, cost & risks
Feasibility study - Technical, Operational, Financial
Contract between board and project manager
What is the purpose of the initiation phase ?
Defines the scope, attributes and requirements of the project.
It’s purpose is to create a shared understanding of Expectations, Purposes & ObJectives.
Understand the drivers for change
Whats the purpose of the planning phase?
To develop a course of action
following acceptance of PID
What needs to happen during the planning phase ?
Create a project plan
- Work break down structure
- Budget
- Quality standards
- planning applications and approval for building work projects
- Highlight key risks
Whats the purpose of the execution and control phase ?
Co ordinate all parties
Monitor progress
What needs to happen during the execution and control phase ?
Project delivery
Monitor progress via reports to identify, evaluate and address any issues or rising risks.
Whats the purpose of the closure phase?
Implement and close
& post completion review
Implement
Operational, Live environment
Close
Ensure contract obligations are met
Stakeholders pleased
What project technique could be used for Flathall during a construction project?
‘Waterfall’ methodology with clear milestones before the next phase begins. Ie structural phase before design phase.
When might traditional project management approaches such as waterfall methodology not work?
When a more agile approach is required such as during the implementation of a new app. For example, tenant feedback may be required before making changes etc ‘sprints’
How might an organisation approach delivering transformational change?
Via a project programme which consists of a portfolio of projects
What three key areas is a project manager responsible for?
Product, Process, People
What skills are required for a project manager to be successful?
Industry awareness
Scope control
Time management
Budgeting and budget control
Risk management (Identify, evaluate, control)
Problem solving
What are the stages of a project team in reference to the Tuckman model
Forming
Storming
Norming
Performing
Dorming/ Adjourning
What key skills are required in order to successfully manage change ?
Strong leadership
Motivation
Communication
Negotiation
Delegation
What project management tools can be used to help run successful projects?
Work streams with work flows via wbs
Implement key milestones with dates
Set weekly objectives to stay on track
Task management software
Gantt charts
What tools could be used to successfully manage projects risks?
Identify (lessons learned log)
Scenario planning (inc steps)
Use risk register
Tara model
What steps could be used when scenario planning?
- Define scope
- Define drivers
- Collect data
- Analyse data
- Develop scenarios
- Maintain and update
How might the progress of the project be monitored/ communicated?
Project management software
Visualisation dashboards
Project status reports
RACI chart
Describe the key Project stakeholders?
Project sponsor
Project board
Project client
Project customer
Project manager
Project team
Project suppliers
Describe the project sponsor ?
Project sponsors are effectively the project owners. Ie Flathall’s executive board - the highest level organisational support of the project. Likely to be the heads of the departments relating to the project.
Responsibilities will include
- Securing the project funding
- Appointing the project manager
- Chair the project board
- Ensure the PID is signed off
What is the formula for gearing ?
< 1 and gives % (Favoured formula) = Debt / (debt + equity)
Or
> 1 = D/E
Describe the project board?
Only really required In larger projects and again consists of key senior stake holders.
Responsibilities will include
- Sign off the PID and agreed funding
- Overall strategic direction of the project
- Approve any changes
- Offer senior support to the Project manager
- Resolve serious risks of major deviations that have been executed.
Describe the project client?
Is the person or group that requested the output of the project.
Acts as a representative of the project customer and work with the project manager to ensure customer needs are met. This could be a combination of Flathall’s portfolio management team and customer service team.
Describe the project customer ?
This is the end user of the outputs of the project. In most cases for Flathall this will be the students / tenants but this can change if the project is internal.. ie deliver a new accounting software or ERP system.
Describe the role of the project manager?
The project manager is in charge of delivering the project and ensuring the project constraints are met, ie time, budget, quality & scope.
Main responsibilities include
- Creating the project plan
- Providing direction and motivation to the project team
- Communicating regularly with stakeholders via progress reports
- Escalating major issues
- Helping to prevent conflict
Describe the role of the project team?
The project team carries out the individual tasks that are needed to deliver the project outputs.
Members of the team are directed by and report to the project manager.
Describe the role of the project suppliers ?
The project team can some times consist of people or sub teams with specialist skill sets bought in from outside of the direct employment of the company. These subcontractors are referred to as project suppliers.
In Flathall’s case this could be construction teams or tech development company responsible for building a new app etc.
Describe Lewin’s 3 stage change model?
Unfreezing - lobbying change by describing current problems and describing the benefits of he change to key stakeholders. (Rallying)
Remoulding - Implementation stage via training and support. (Driving)
Refreezes - reward stakeholders useing the new system. (Sustaining)
What are Lewin’s 2 forces during change?
Driving forces (Positive)
- Compelling arguments
- Enlist allies
Restraining forces (Negative)
- Fear and opposition
- Inadequate investment / training budget
Driving forces, must exceed restraining forces, in order for change to happen.
Current state -> Desired state
What are possible ‘chosen strategies for change’?
*important for use in exam
Education and communication
Participation
Facilitation and support
Negotiation
Manipulation
Coercion
What is the yield to maturity of a bond?
This takes the investors perspective of the bond. The yield to maturity calculation allows investors to compare the returns of bonds with different horizons and coupon rates.
From a company perspective, the YTM is not the same as the cost to the company as the interest on the bond is tax deductible so requires that adjustment.
What are irredeemable bonds?
Rare type of bond where the company will pay a coupon rate in perpetuity and therefor use perpetuity equation to calculate the cost.
How do you calculate the cost of a bond?
More complex using the IRR formula, using to rates that set negative NPV and positive NPV and taking the average as the estimated IRR and cost of the bond.
To Flathall just the coupon rate surely?
How would an investor calculate YTM ?
The same was as the company would calculate cost (IRR) however they would use pre tax values as there is no tax advantage to the investor.
What does ‘ex div’ mean
Value of a share just after a dividend has been paid - ie without dividend rights
What does ‘cum-div’ mean?
Generally, when a dividend is announced the share price rises by the dividend amount as shareholders are now entitled to the funds.
Therefore, the value of a share just before the dividend is paid - ie with dividend rights
Using this figure in the cost of equity formula would require us to remove the dividend to reach ‘ex div share price’
Whats the formula for the cost of equity using DDM assuming constant dividend?
Cost of equity = Dividends discounted / ex-div share price
Whats the formula for the cost of equity using DDM assuming constant dividend assuming constant growth?
Cost of equity = Current Div*(1+g) / ex-div share price + g
What methods does the DDM use to estimate dividend growth?
Averaging method looks at previous dividend vs current dividend and assumes that the past may represent future growth.
Profit retention approach which makes sense as it suggests that shareholders are sacrificing dividends now for dividends in the future and is positive as the company can grow via allocation of its own capital
g = r x b
where r = return the company generates when profits are reinvested
b = proportion of profits retained ie other side of the dividend payout ratio
Flathall have a payout ratio of 37% therefore the proportion of profits retained would be 63%
Negative - Assumes constant return, only equity financed, retained profits are only source of investment, constant reinvestment amount
What are types of debt funding are available?
Mainly bond finance and bank finance but also Private loan or Directors loan.
bond finance uses IRR formula to calculate cost
(irredeemable & redeemable)
Bank finance is the bank rate adjusted for tax
(loans, overdraft, asset finance, recurring credit facilities)
Both are generally cheaper due to wind up hierarchy but increase leverage / decrease interest cover.
What are the main types of equity finance available ?
Ordinary shares
No guaranteed dividend but benefits in the share price increasing
Preference shares
Fixed dividend
What other types of finance exists?
Cash generated from retained earnings = WACC appropriate if the project replicates current business activities and therefore risk.
What are the characteristics of high performing teams?
Clear Purpose/ Goal
Diverse skill sets
Experience / youth, energy
Clarity of roles
Clarity of resources
Clarity of direction
Communication practices / review
Clarity of performance metrics that measure progress towards Purpose and goal / role specific metrics & rewards
Focus
Control
Job satisfaction
How might you go about improving team performance?
- Improve clarity at high level and individual level
- Improve jelling
- Improve motivation
- Encourage teamwork
- Encourage leadership
- Utilise technology
- Set boundaries
- Improve the working environment
How should we go about the project team selection ?
What are the requirement’s, who that we have available that we could use and who do we need to hire externally and will they be able to work together?
Review our current teams? And then review what we may need externally?
Portfolio management team - look to acquire new sites, planning, building regs & construction.
Customer service team - handle relationships with institutions and students via concierges, maintenance.
