Project

Proposal
Wr teshop
Training
Cabua-an Beach Resort, Mambajao, Camiguin
August 17-18, 2017
What WE need to consider:
• An organization • The lack of technical
needs to submit knowledge and capability in
considerable preparing/writing fundable
project proposals project proposals, most often
attuned to the is one of the reasons for the
funding agency’s rejection or disapproval of
arrangements such by funding agencies.
and thrusts.
What
our
are AT THE END OF THIS
SESSION:
Training
OBJECTIVES
• You will become competent and confident in writing
project proposals

• Your knowledge and competency in designing/writing

project proposals will be enhanced

• You will know and understand the methods and tools

that support a good and fundable project proposal

• During the training you practice the techniques of

writing a project proposal

• You will finish a complete project proposal

What can you say
about the picture?
 1. Poor
Communication

2. Underestimated
Timelines 3. Failure to hammer out
the nitty gritty details 5
4. Unhelpful teams just
complicate things
REASONS
for the project to be a
5. Management
not paying
enough attention

Source: https://www.wrike.com/blog/top-reasons-for-project-failure
1. POOR
Communication
"There has been one thing that consistently
shows up on every project gone bad — poor
communication. The other factors vary, but
communication issues are always at the core
of failed projects."

—Tom Atkins
2. UNDERESTIMATED
Timelines
• When you underestimate the timeline for
a project, the result is more than just a
missed deadline on the calendar.

It's important to accurately predict your timeline

3. Failure to hammer out the
Nitty gritty details
• Are you a big-picture thinker?
• Do you have a detail-oriented mind?

If you're still missing part of the picture, then start

reviewing past projects to see where your
common oversights have been, and take those
lessons learned to plan more accurately in the
future
4. Unhelpful teams just
Complicate things
• Its about teams and tools that cannot deliver on
the expectations
• Keeping yourself locked in with teams that create
more problems means you're going to spend
extra time and money hiring additional teams to
fix their mistakes. Bail early, before they create
more problems than they're worth.
5. Management not paying enough

Attention
• Poor Planning
• Poor Management
• Poor Management Team
• Weak Mission/Vision/Goals of the
Association
 Food for
THOUGHT
“IF YOU FAIL TO PLAN, YOU ARE
PLANNING TO FAIL!”

- Benjamin Franklin
DOLE
KABUHAYAN
group
business
plan
 Project Brief
Proponent ACP/Proponent
:
Camiguin Vendors Association
Beneficiary
:
Proposed Business/Project Consumer Store
:
No. of Beneficiaries 15
:
Total Project Cost 187,500.00
 DOLE Support
:
150,000.00
 Proponent ACP/Proponent
:
37,500.00
Beneficiary
 Others
:
n/a
:
Contact Person Juan dela Cruz
EXECUTIVE SUMMARY
1. Marketing Aspect
2. Production Aspect
3. Management Aspect
4. Financial Aspect
5. Collaboration of Stakeholders’ Commitments
(Organization/ACP, beneficiaries, etc.)
1. MARKETING ASPECT
Marketing is considered to be the most important area. This is because it
describes market situations where the product can be identified through
DEMAND ANALYSIS.

• PRODUCT Description - the primary and secondary product/s of the proposed project is/are vividly
described in this section.
• Demographical Segmentation – determines to whom, a particular place the products will be offered
• Age, Sex, Religion, Educational Attainment, Ethnic Group, Income Level,
Occupation, Credit Availability, etc.
• Demand – the proponent pinpoints the specific customers who are willing and are able to buy the
proposed products

• Supply – represents the number of sellers/producers selling similar or substitute products

2. PRODUCTION ASPECT
• Production Process – discusses how the products will be produced, specifying
the steps involved and the time involved in finishing a specific step

• Equipment/tools/jigs – a brief explanation on the tools and equipment used in

production

• Layout – a brief explanation in the floor plan for the smooth flow of processing
and this part must include the flow of raw materials from one location to
another until the raw material becomes the final product.
3. MANAGEMENT ASPECT
• The management aspect implies a clear and
precise identification of duties and
responsibilities, flow of authority and manpower level
requirement. It must be set up for optimum
effectiveness.

• To achieve these, management must be able to plan all

activities, for the company to become productive and
competitive industry through human resource, financial
capability and new technologies.
4. FINANCIAL ASPECT
• When starting a business the biggest factor that
determines the success of your business is in fact money,
and how much you have of it

• The financial aspects are worked on the most on any

business, because the whole purpose of the business is all
around finance and how to deal with it.

• In this section, the proponent must have a brief explanation

on where, how, how much the funds will be needed in
order to start the implementation of the project.
5. Collaboration of Stakeholders’ Commitments
(Organization/ACP, beneficiaries, etc.)
A commitment is a promise made to people directly or indirectly
affected by your project. It involves an organization agreeing to do
or not to do something important to stakeholders.

Commitments can be:

• Promises made by various agencies/organizations to assist the
proponent
• Related to regulatory or environmental compliance.
• Promises attached to assets i.e. a display center in a building.
• Linked to geographical areas of cultural significance.
• Multi-stepped in nature, that must be tracked prior to being
completed.
 ORGANIZATION/PROPONENT/ACP
OVERVIEW
• History, structure and organization
• A Brief description on company’s history and/or reason for the business

• Strategic direction
• Vision/Mission/Goals

• People and relevant skills and expertise

• Who will manage the business on a day-to-day basis?
• What experience does that person bring to the business?

• Address/location
• Where will be the location of the business?
• Where will you sell the products?
• Where will you acquire your raw materials?
INTRODUCTION
1.Background Information
1.Information regarding the company, the proposed business and its processes.

2.Purpose and objectives of the proposed business/project

1.Objectives of the Association and the objectives of the project
2.A brief description of the sole purpose of the project

3.Direct and indirect beneficiaries

1.Who are the beneficiaries? Indirect and Direct.

4.Brief description of the proposed business

1.Explain the complete process of the business from acquiring the raw materials
down to its selling.
THE PROPOSED
BUSINESS/PROJECT
A.Marketing Plan
B.Production Plan
C.Management Plan
D.Financial Plan
E.Stakeholders’
Commitments
MARKETING
plan
• Analysis of the Market
• How the business would fit in
• Who are your buyers
• Who are your competitors
Company Market Share
Brand A 35%
Brand B 15%
Brand C 50%
• What are the opportunities/threats
• SWOT Analysis
MARKETING
plan
• Products or services to be offered
• Quality
• Affordability
• Brand strategy
• What makes the product/service unique
• Advantage against competitors
• Distribution strategy
• How big is your volume requirement
• What is your delivery schedule
• What is your mode of selling (cash or credit or both)
MARKETING
plan
• Product strategy
• How you will sustain the delivery of product/service
• Pricing strategy
• What is your buying price
• What is your selling price (mark-up)
• Promotion strategy
• How you will promote your product/service
• Place
• putting the right product, at the right price, at the right
place, at the right time
PRODUCTION
plan
• Production Cycle (step by step procedures in
producing the product/service)

• Plant/Workplace (building, size, lay-out, location)

• Raw Materials (how many, availability from supplier,

cost)
PRODUCTION
plan
• Facilities required and their production capacity (equipment, tools
and materials)
• Personnel (how many directly involved, production capacity,
skills/training needed, support services, remuneration)
• Safety and Health (safety measures, protective gears)
• Productivity (production capacity of personnel/equipment)
• Space (total area for production, stockroom for raw materials,
office/transaction space)
MANAGEMENT
plan
• Composition of Project Management Team
• Specific Duties and Responsibilities
• General Manager
• Production Supervisor
• Marketing Supervisor
• Administrative Head
• Cashier
• Logistics
• Bookkeeper
• Etc.
MANAGEMENT
plan
• Organizational Structure
• Tasks Assigned to Production Workers
• Specific training needs
• Commitment of Stakeholders
• LGU
• National Government Agencies
• Non Profit Organizations
• Academic Institution
• Profit sharing scheme
WORKSHOP
THANK
YOU
FINANCIAL PLAN
• Monthly Working Capital Requirement
a.Cost of Direct Raw Materials
Materials Unit Cost Quantity Total Cost

Total

b.Cost of DirectLabor
Labor Rate Quantity Total Cost

Total
 FINANCIAL PLAN
c. Overhead Cost
1.PMT Supervision/Administrative Cost
Position Rate Quantity Total Cost

Total

2.* Marketing Cost : ______________________

3.* Utilities : ______________________
4.* Transportation : _____________________
5 .* Rent : ______________________
6.* Others : ______________________

(Note * : Show breakdown of computation)

FINANCIAL PLAN
d. Capital Outlay (Equipment/Tools)
Item Unit Cost Quantity Total Cost

Total

e. Pre-Operating Costs
• Cost of Trainings (Show computation per training)
• Licenses/permits
• Other attendant costs
FINANCIAL PLAN
• Total Project Cost

FUNDING SOURCE
TOTAL
ITEM Proponent/
COST DOLE Beneficiaries Others
Org
1. Land
2. Building
3. Working Capital
 Raw Materials
 Labor
 Equipment
 Overhead/
Administrative Cost
 Rent
 Marketing
 Utilities
 Transportation
4. Pre-Operating Expenses
 Training
 Licenses/Permits
 Others
 FINANCIAL PLAN

Financial Statements (three (3) year period)

Income Statement (Profit-and-Loss Statement)
How much does the business earn over a given period of time

Cash Flow Statement

How much cash is needed to meet monthly obligations, when will it be needed and where it is coming from

Balance Sheet Statement

Summary of all financial data at a given point in time showing the business’ growth in terms of net worth
Stakeholders’ Commitments
• Commitments made between the ACP and the beneficiaries for the
success of the project.
• Profit sharing scheme
• An agreement made by the beneficiaries for the payment scheme.
Using ' (delta) to denote the difference between an
actual and a budgeted amount, this intuitive
derivation can be formalized as follows:
Unit margin and sales
volume variances
Product mix variance
When a company sells several
The difference in gross margin products having different unit
caused by the difference gross margins, the mix (relative
between the mix assumed in the proportions) of high-margin and
budget and the actual mix sold low-margin products sold
influences the total gross margin.
Calculating the
mix variance
The difference between the actual quantity sold and
that product’s budgeted proportion, that is, the
quantity that would have been sold if that product’s
sales had been the budgeted percentage of actual
sales volume. The mix variance is the sum of these
amounts for all products.
Production
COST
variance
Production The analysis of production variance:

COST Sales volumes = no use

Production volume = relevant

Variances Overhead volume variance =

relevant

OVERALL GOAL
To explain the
difference between
actual and budgeted
net income
THUS,
Actual net income, function of
actual sales volume, and budgeted net Gross Actual Budgeted
income is dependent on budgeted Margin Sales Sales
sales volume Sales Volume Volume
Production Month of August

COST
Budget Actual
Production volume, in units 500 600

Variances
Direct Materials cost, per unit $10.00 $10.00
Direct Materials cost, total $5,000 $6,000

FACT 1: There is no direct materials variance

FACT 2: 100 more units were produced from the
original plan
FACT 3: the $1000 difference between is not
accounted in August net income variance
IN SUMMARY:
Gross margin sales volume variance results from a difference
between budgeted and actual sales volume
Overhead Volume Variance, relates solely to overhead costs
There is no volume variance for direct material costs or direct
labor costs
OTHER
Variances
Total variance in items of General
Administrative and non-operating
could be decomposed into: Certain non-operating items can

2
affect the NET INCOME
VARIANCE, such as:

1
1. extraordinary items
2. income taxes, and
SPENDING 3. foreign currency translation
VOLUME COMPONENTS adjustments
COMPLETE
analysis
Variance
Analysis “ The evaluation of performance by means of
variances, whose timely reporting should maximize
the opportunity for managerial action.
“
CIMA Official Terminology, 2005

Variance analysis involves

breaking down the total variance
to explain:
1. How much of it is caused by the
usage of resources differing from the
standard
2. How much is caused by cost of
resources differing from the
standard
3 CATEGORIS

3
OF VARIANCES

2 General

1
and
Production Administrative
Marketing
Part A-Income Statement
A. Income Statement
Month of November

Budget Actual Variance

Sales $ 3,780.00 $ 3,857.00
Less: Satandard cost of sales 3,080.00 2,926.00
Gross margin at standard cost 700.00 931.00 $ 231.00 F
Production Variances 574.00 574.00 U
Gross Margin 700.00 357.00 343.00 U
Selling, general and administrative expense 280.00 350.00 70.00 U
Income before tazes $ 420.00 $ 7.00 $ 413.00 U
Part B-What Accounts for the variances in the IS?
B. Summary of Variance

Unit Margin $ 266.00 F

Sales Volume 35 U
Net margin 231 F
Material Price 112 U
Material Usage 28 F
Labor rate 56 U
Labor effeciency 168 U
head Production volume 105 U
Overhead spending 161 U
Net Production 574 U
Selling, general and administrative 70 U
Income variance $ 413.00 U
Part C-Analysis of the difference between
budgeted and actual gross margins

C. Gross Margin Variances

Underlying Data Sales (units) Unit Margin Total Margin

Budget 200 $ 3.50 $ 700.00
Actual 190 $ 4.90 931
Net Variance variance $ 231.00 F
Part C-1 Computation of Margin Variances
Part D-Analysis of the
Production Cost Variances
D. Production Cost Variances

Item Underlying Cost Data Standard Actual

Production volume 200 units 170 units
Direct Material 2 lbs./unit * $ 1.40/lb 320 lbs. * $ 1.75 = $ 560
Direct Labor 0.4 hr./unit * $14.00/hr 80 hrs. * $ 14.70 = $ 1,176
Overhead $700 per mo. + $3.50 per unit $ 1, 456
Computation of Cost Variances
1. Material price variance:
Price * Actual Quantity = Material Price Variance
($0.35) * 320 = $ 112.00 U

2. Material usage variance:

Quantity * Standard price = Material usage variance
20 * 1.4 = 28 F

3. Labor Rate Variance

Rate * Actual Hours = Labor Rate Variance
0.7 * 80 = 56 U

4. Labor efficiency Variance

Hours * Standard Rate = Labor efficiency Variance
(12.00) * 14 = 168 U

5. Overead production volume variance:

Absorbed overhead: 170 units * $7 per unit $ 1,190.00
Budgeted Overhead: $700 + ($3.5 * 170 units) 1,295.00
Overhead Production volume variance $ 105.00 U

6. Overhead spending variance:

Budgeted Overhead: $700 + ($3.5 * 170 units) $ 1,295.00
Actual Overhead 1,456.00
Overhead spending variance $ 161.00 U
Part E-Variances in general
and administrative expense
Consist of the amount of, and reasons for,
differences between the budgeted amount and
the actual amount for each significant item of
general and administrative expense
Uses of
Variance Analysis

1
Identify the various causes of the
overall income variance
It is important to distinguish between
those that are controllable by a
responsibility center’s manager and
those that are non-controllable.

2
Useful in signaling possible managerial
strengths or shortcomings
Automatically equating the terms FAVORABLE
to good performance and UNFAVORABE to
poor performance can sometimes lea to
unjustified appraisal judgements by superior
and can thereby demoralize subordinate
managers and create resentment on their part.
PROBLEMS
AND CASE
Problem 21-3
Delta Division of Gotham Industries, Inc., makes two products, A
and B. Both products use the same raw material and are produced
in the same factory by the same workforce. In preparing its annual
statement of budgeted gross margin, Delta’s management used the
following assumptions:
 Problem 21-3
The year’s actual results were as follows: REQUIRED
1. 1,750 units of A were sold for a total of $427,000. a) Do as detailed an analysis of
2. 3,250 units of B were sold for a total of $481,000. variances as the data given
permit.
3. Production totaled 1,800 units of A and 3,300 units
of B. b) Prepare a summary
statement for presentation to
4. 180,000 pounds of raw materials were purchased
and used; their total cost was $275,400.
Delta’s top management
showing the year’s budgeted
5. 9,450 hours of direct labor were worked at a total and actual gross margin and
cost of $187,110. an explanation of the
6. Actual overhead costs were $265,192. difference between them.
Answer 21-3
Gross Margin Variances
Budgeted unit Margin A = $240 - (60 + 50 + 60) = $70
Budgeted unit Margin B = $148 - (45 + 30 + 36) = $37
Actual unit Margin A = $ (427,000 / 1,750) – 170 = $74
Actual unit Margin B =$ (481,000 / 3,250) – 111 = $37

Sales Volume Variance: $0.

Mix Variance
A: (1,750 – 1,900) X $70 = $10,500 U
B: (3,250 – 3,100) x $37 = $ 5,500 F
$ 4,950 U
Unit Margin Variance:
A: ($74 - $70) x 1,750 = $ 7,000 F
B: (by inspection) = $ 0
$ 7,000 F
Net margin variance = $4,950U + $7,000F = $2,050F
Answer 21-3
Labor variance:
Standard labor/unit, A: $50 / $20/hr = 2.5hrs/unit
Standard labor/unit, B: $30 / $20/hr = 1.5hrs/unit
Rate variance:
{$20 – ($187,110 / 9,450 hr) x 9,450} = 1,890F
Net labor variance = $ 890F

Material variances:
Standard materials/unit, A: $60 / $1.50/lb = 40 lbs.
Standard materials/unit, B: $45 / $1.50/lb = 30 lbs.
Usage variance:

{(1,900 x 40) + (3,100 x 30) – 180,00}x $1.50 = $16,500 U

Price variance:
[$1.50 - $275,400 / 180,000] x 180,000 = 5,400 U
Net materials variance = $21,900 U
 Answer 21-3
Statement of Budgeted and Actual Gross margin Overhead variances:
BUDGET ACTUAL Spending variances:
Revenues $914,800 $908,00 $75,200 + $0.80 ($187,110) - $265,192 = $40,304 U
COGS 667,100 658,750 Volume variance
Gross Margin @ std 24,700 249,750 1.2 ($187,110) - $224,888 = 356 F
Production Cost Variances Net overhead variance = $39,948 U

Margin Usage -- (16,500) Sum of All variances (Profit variance):

Material Price -- (5,400) $2,050 F + $21,900 U + $890 F + $39,948 U
= $58,908U
Labor Efficiency -- (1,000)
Labor Rate -- 1,890
Overhead Volume -- 356
Overhead Spending -- (40,304)
Total Variance -- (60,958)
Gross Margin, actual $247,000 $188,792
 CASE 21-3: WOODSIDE PRODUCTS , INC.*
A. GROSS MARGIN VARIANCE B.1 SELLING AND ADMINISTRATIVE VARIANCE
GIVEN: INVENTORY = $55/UNIT in 1992 GIVEN: Decompose into volume and
spending components
Unit Margin
= ($50-$39)*82.350 = $905,750 F
Variance Volume Effect = (88,125-82,350) * $4.42 = $25,525 F
Sales Volume Spending Effect = $21,942 F
= (82,350-88,125) * $39 = $225,225 U
Variance
$ 47,467 F
$ 680,625 F
B.2 SELLING AND ADMINISTRATIVE VARIANCE
Computation for Spending Variance

Variable Costs = (4.42-4.7) * 82,350 = $23,058 U Labor Rate

= (16-16.8) * 64,860 = $51,888 U
Variance
Fixed Costs = 1,697,298 – 1,652,298 = $45,000 F
Material
$ 21,952 F
Usage = (60,8252-64860)*16. = $64,560 U
Variance
C. PRIME COST VARIANCES $116,448 U

Material Price
= (2.50-2.90) * 626,200 = $250,480 U
Variance
Material Usage
= (648,800 – 626,200)*2.5 = $56,500 F
Variance
$193,980 U

CASE 21-3: WOODSIDE PRODUCTS , INC.*

D. PRODUCTION OVERHEAD VARIANCE
Overhead Production Variance

“
= (81,100-88,125)*19 = $133,475 U

Overhead Spending Variance, variable costs

In presenting to the
Board of Directors, the
(81,100 * 4) – 359,500 = $35,100 U numbers will contain an
Overhead Spending Variance, Fixed Costs = $247,135 U explanation with
COGS @ std = 82,350*$5.5 = $4,529,250 reasonable assumptions
COGS, incl. pdn. Cost variances = 5,255,388 that can be easily
Total pdn. Cost variances = $726,138 U
validated by Marilyn
Mynar. This will justify “
Material Variance = $193,980 U the activities incurred.
Labor Variance = $116,448 U
O’hd, pdn. Vol var = $133,475 U
O’hd, pdn. Vol var, vbl costs = $35,100 U
$479,003 U
O’hd. Spending var., fixed costs $247,135 U

CASE 21-3: WOODSIDE PRODUCTS , INC.*

D. PRODUCTION OVERHEAD VARIANCE
1 4
Unit selling price is increase by $11, if
production costs had not increased, the
pretax profit would have increase by
$905,850
5
But, this price increase caused sales
2
volume to drop by 5,775 units (6.6%). Last
year’s price and cost levels, the impact of
this decline reduced pretax profit by
6
$225,225
3
It is favorable if there is a decrease in unit
sales as it would positively impact the
pretax profits, the decline of volume will
save us $25,525 in selling costs
CASE 21-3: WOODSIDE PRODUCTS , INC.*
The variable selling cost per unit,
however, increased by $0.28, because of
salespeople’s commissions related to
higher per-unit selling price. It caused
pretax profit to drop by $23,058
Administrative costs and other selling
costs decreased by $45,000 which gave a
favorable impact on pretax profit.
Increases in the purchase price of material
and labor rates caused pretax profit to
drop by $302,368 which means that we
were efficient in maximizing materials
than last year. But resulted to the
decreased pretax profit of $8,060
D. PRODUCTION OVERHEAD VARIANCE
The factory worked not less than its

7
volume this year that resulted to an Impact on higher selling price $905,850
INCREASE in the PRODUCTION COST
per unit since fixed factory overhead Impact of lower sales volume ($199,700)
was on a lower volume. The effect, Impact of lower production
reduced pretax profit by $133,475 (133,475)
volume

8
Impact of all spending and
(579,721)
Factory overhead costs increased, efficiency changes
reducing pretax profit by $282,235
Net change in pretax income $ 1,954

9
Overall, pretax profit increased
$1,954 for the ff. reasons:

CASE 21-3: WOODSIDE PRODUCTS , INC.*

CHAP other
TER
21
Variance
analysis
Thank you!