Chemco is a subsidiary of an engineering company with a turnover of Rs 75 Crores and a 15% bottom line. It initiated implementation of an enterprise wide integrated software and systems solution and hired the best consultant - Dramco. The scheduled budget was Rs. 2.5 crores and time frame was 2 years. At the end of 2 yrs, a committee was formed to review the implementation part. The MD found that the project was only 40% complete and facing serious cost and time overruns. The top management blames the consultant and the plant level managers and workers for the delay. On the other hand, the consultant blames top management. Question: Identify the problem and discuss the course of action.
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company with a turnover of Rs 75 Crores and a 15% bottom line. It initiated implementation of an enterprise wide integrated software and systems solution and hired the best consultant - Dramco. The scheduled budget was Rs. 2.5 crores and time
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75 rupees in revenue company with a 15 bottom line. It recruited a top consultant and started implementing an enterprise-wide integrated software and systems solution. The planned budget was 2.5 crores of rupees and time.
Explanation:
Planned Budget:
- The process of creating a budget and using it to manage a company's operations is known as budgetary planning.
- Budgetary planning is used to reduce the possibility that an organization's financial outcomes would be less favorable than anticipated.
- Making a budget is the initial step in financial planning.
- When a budget model is finished, it is utilized to manage a company's operations.
- Reporting budget vs reality deviations to management is one way to ensure that the biggest negative differences are looked into.
- Paying incentives in accordance with budget compliance is an additional choice.
- Last but not least, only funds that are still available in the budget may be used to approve expenses.
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