TENDERING AND ESTIMATION

1.0 Introduction

The term “Tender means the Contractor’s priced offer to the Employer for the execution and
completion of the Works and the remedying of any defects therein in accordance with the
provision of the Contract, as accepted by the Letter of Acceptance”.by FIDIC (1987).

Tendering: The process of inviting and receiving bids or proposals from contractors or service
providers to undertake a project or provide a specific service. Tendering involves is a process
of submitting a bid or proposal to undertake a project or providing goods and services. It
involved preparing and submitting a tender document, which includes details of the work,
timeline and cost.

Brook (1997) defines Tender as “A sum of money, time and other conditions required by a
tenderer to complete the specific construction work”. Karim (2009) defines “Tendering process
is a series of actions to generate offers or offers from single bidder, or a number of competitive
bidders hoping to be awarded the business in words, service, or supply of goods”. The whole
process of tendering in construction and engineering industry is a comprehensive and complex
procurement process and very expensive exercise for Employer and Tenderer as well (Teo,
2009).

Tendering advertising the project requirements, receiving and evaluating bids, and selecting
the winning bidder. The tendering process is usually managed by the project owner or their
representative.

1.1 Types of Tendering Process

According to Guide of Tendering for Tenderer issued by Department of Commerce, New South
Wales (Doc, 2005) & Karim (2009), there are four main processes:

• Open Tenders

In this procedure, the Tenderer is invited by public advertisement and through e-tendering
websites. Then the Tenderer has to demonstrate in his tender, his skills, resources, experience,
strength and financial capacity to execute the project. This method is widely used for small
projects (Karim, 2009). Due to open invitation for a large number of competitors, this process
proves to be advantageous in attracting a most economical bid.

• Selective Tender:

In this process only limited numbers of potential Contractor are invited for tender in order to
work any specialized work. Tenderers are selected from the list of pre-approved Contractors
who are already qualified or prequalified for special works and contract value, for instance, oil
and gas projects, industrial or building complex and sports complex (Karim, 2009).
 • Expressions of Interest

In this process, Tenderer are invited by public advertisement to quote for particular works that
take place sporadically for instance maintenance of major dams, breakwaters, pipelines etc.

• Invited Tenders

This process is used only in emergency situation for some specialist works, where only few
Contractors have such experience and capability and they are always less in numbers. Karim
(2009) proposes addition of two more procedures in this list: Serial Tendering & Two stage
tendering. In Serial Tendering, the Client or the Investor negotiates with the Contractor in order
to give them number of similar projects, and in the Two stage tendering process, the
Contractors involve at earlier stage of the project.

• Expressions of Interest

In this process, Tenderer are invited by public advertisement to quote for particular works that
take place sporadically for instance maintenance of major dams, breakwaters, pipelines etc.

• Invited Tenders

This process is used only in emergency situation for some specialist works, where only few
Contractors have such experience and capability and they are always less in numbers. Karim
(2009) proposes addition of two more procedures in this list: Serial Tendering & Two stage
tendering. In Serial Tendering, the Client or the Investor negotiates with the Contractor in order
to give them number of similar projects, and in the Two stage tendering process, the
Contractors involve at earlier stage of the project.

1.2 Problems due to selection of the Lowest Bidding Tenderer

The lowest tender price is usually the key of the winning a contract. In fact, it’s most critical
task for the Employer to take decision. However, Flanagan & Norman (1982) says the selection
by lowest bid, will not necessary reflect the “true cost” of the project. That’s why Latham
(1994) clearly mentioned in his report that, the criteria to select a consultant or a contractor
should be based on skill, experience and previous performance, rather than automatically
accepting the lowest in all cases.

Tendering and estimation are two related but distinct processes in the construction and project
management industries.

2.0 Estimation

Estimation: The process of calculating the cost of a project or a specific scope of work. This
involves quantifying the materials, labor, equipment, and other resources required to complete
the project, and then pricing these resources to arrive at a total cost estimate. Estimation is
usually done by a contractor, consultant, or project manager to prepare a bid or proposal for a
project.
Brook (1997) defines Estimation as “The technical process of the predicting the cost of
construction”. In NQF (2007), Estimation is described as “...the process used by the contractor
to establish the cost to themselves of carrying out construction works”.

2.1 Cost estimating

Cost estimating is the estimation of the expected cost of producing a job or executing a
manufacturing order before the actual production is taken up or predicting what new products
will cost, before they are made. The expected expenditure on all the items used to make a
product is added to give the estimated cost of final product.
The purpose of an estimate has a different meaning to different people involved in the process.
To the owner, it provides a reasonable, accurate idea of the costs. This will help him or her
decide whether the work can be undertaken as proposed, needs to be modified, or should be
abandoned.
2.2 Objectives of cost estimation
The objectives of cost estimation are given below:
It gives an indication to the manufacturer whether the project to be undertaken will be
economical or not.
(ii) It enables the manufacturer to choose from various methods of production the one which is
likely to be most economical.
(iii) It enables the manufacturer to fix the selling price (sales price) of the product in advance.
(iv) it helps in taking decisions to make or to buy.
(v) Cost estimation gives detailed information of all the operations and their costs.
(vi) It gives an estimate of the total expenditure expected to be made on a project enabling the
management to arrange the necessary finance or capital.
(vii) It helps a contractor to submit accurate tenders for entering into contract to manufacture
certain products.
(viii) Cost estimation enables the management to plan for procurement of raw materials/tools
etc., as it gives detailed requirements.
For estimating the cost of a product, the following costs are essential:
1. Direct material costs: It is the cost of those materials which become a part of final product.
2. Direct labor costs: It is the expenditure made on the wages and salaries of workers who are
directly engaged in the manufacturing processes e.g. turner, milling machine operator, painter,
etc.
3. Direct other expenses: These are the expenses, except direct materials cost and direct labor
cost, which can be identified and allocated to a particular product, e.g. cost of machine hours
and cost of tools, jigs and fixtures etc.
4. Overhead costs: overhead cost includes administrative expenses, sales and advertisement
costs etc.
Contingency charges are extra costs added into the project budget to allow for variation from
the cost estimate. All cost estimates are uncertain and the final installed cost of many items is
not known until installation has been successfully completed. Apart from errors in the cost
estimate, contingency costs also help cover & changes in project scope; & changes in prices
(e.g., prices of steel, copper, catalyst, etc.); & Currency fluctuations; & Labour disputes; &
Subcontractor problems; and & Other unexpected problems. A minimum contingency charge
of 5% -10% should be used on all projects. If the technology is uncertain, then higher
contingency charges (up to 50%) are used. The accuracy of an estimate depends on the amount
of design detail available, the accuracy of the cost data available, and the time spent on
preparing the estimate. In the early stages of a project, only an approximate estimate will be
required, and justified, by the amount of information available.
In engineering works, estimates are usually presented in a standard format formerly known as
Bill of Engineering Measurements and Evaluation (BEME). The BEME is a list of work
items, their estimated quantities and cost prepared from the specification and drawings of a
project. The BEME serves as a tool for estimating the cost of project before, during and after
its implementation and also a part of the tender documents
Difference Between Estimating and Tendering
1. Estimation is the process of calculating the cost of a project, while tendering is the
process of inviting and evaluating bids from contractors to undertake the project.
2. Cost Estimation from Client's perspective is essential to know the expected project cost for
allocation of the budget and the feasibility of any project. On the other hand, the Contractor's
undertakes the cost estimate practice basically for the tendering purpose in order to get the
project with good profit margin.
3. Estimating informs the design team to make design changes to keep the project on budget.
Finally, tendering is employed by the construction team to establish a firm price (Brook, 2017).
4. Tendering advertising the project requirements, receiving and evaluating bids, and
selecting the winning bidder. The tendering process is usually managed by the project
owner or their representative.
 PRESENTATION ON BRIEFLY DISCUSS THE LIMITATIONS OF

STATISTICAL ANALYSIS, QUESTIONAIRE IN DETAIL

INTRODUCTION
WHAT IS STATISTICAL ANALYSIS?
Statistical analysis is a powerful tool that allows researchers and analysts to draw meaningful
conclusions from data. However, like any methodology used, it has its limitations when questionnaire
is used as a method too.

WHAT IS A QUESTIONAIRE?

A questionnaire is a research instrument that consists of a set of questions that aim to collect
information from a respondent(s) about a particular research, business, project, design, plan and
project. A research questionnaire is typically a mix of close-ended questions and open-ended
questions.

The chart below represents a typical example of questionnaire

LIMITATIONS OF QUESTIONAIRE IN CARRYING OUT A STATICAL ANALYSIS

Despite having many benefits, questionnaires have many limitations.

Self-reported data: Questionnaires rely on respondents' self-reported information, which may be

biased or inaccurate.
Unreliable answers: While there are numerous positives to questionnaires, untruthfulness can be an
issue. Respondents may not be 100% honest with their answers. It can occur for an assortment of
reasons, including social attractive quality predisposition and endeavoring to secure protection.

Data quality: Questionnaire data may be prone to errors, missing values, or inconsistencies.

Unanswered questionnaires: When utilizing questionnaires, some few questionnaires are likely
overlooked or left unanswered. If questions are not needed, there is consistently that hazard they
won’t be replied. Online questionnaires offer a straightforward answer for this issue: make addressing
the inquiry required. Something else, make your review short and your questionnaires simple, and
you will dodge question skipping and improve finish rates.

Respondents may have a secret plan: Similarly, as with such an exploration, respondent
predisposition can be an issue. Members in your study may have an interest in your item, thought or
administration. Others might impact to partake dependent regarding the matter of your
questionnaire.

Contrasts in agreement and translation: The issue with not introducing questionnaires to clients up
close and personal is that each may have various translations of your questionnaires. Without
somebody to clarify the questionnaires completely and guarantee every individual has a similar
arrangement, results can be emotional. Respondents may experience difficulty getting a handle on
the significance of specific questionnaires that may appear clear to the maker.

FORMS OF QUESTIONNAIRE

Online Questionnaire: In this type, respondents are sent the questionnaire via email or other online
medium. This method is generally cost-effective and time-efficient. Respondents can also answer at
leisure. Without the pressure to respond immediately, responses maybe more accurate. The
disadvantage, however, is that respondents can easily ignore these questionnaires.

Telephone Questionnaire: A researcher makes a phone call to a respondent to collect responses

directly. Responses are quick once you have a respondent on the phone. However, a lot of times, the
respondents hesitate to give out much information over. This also an expensive way of conducting
research.

In-House Questionnaire: This type is used by a researcher who visits the respondent’s home or

workplace. The advantage of this method is that the respondent is in a comfortable and natural

environment, and in depth data can be collected.

Mail Questionnaire: This method involves a researcher sending a physical data collection
questionnaire request to a respondent that can be filled in and sent back.

In conclusion, the following are to be noted in carrying out a statistical analysis using questionnaire:
One should always use phrases that are easy to understand, know your target audience or respondent,
and mostly importantly, ask one question at a time before proceeding to others.
BRIEFLY EXPLAIN HOW TO SET VARIABLE COST CONTROL MECHANISM

Answer.

Introduction

Effective cost control mechanism is the backbone of any successful business. It ensures

profitability by minimizing expenses and maximizing efficiency. Variable costs, expenses that

fluctuate with production or sales volume, pose a unique challenge. Unlike fixed costs (rent,

salaries), variable costs require constant monitoring and adjustments. This guide delves into

establishing a robust variable cost control mechanism to optimize your spending and boost

your bottom line.

Step 1: Understanding Variable Costs

The first step is a thorough understanding of your variable cost landscape. Here is what you

need to identify:

• Cost Drivers: These are the factors causing variable cost fluctuations. Common

examples include raw materials, direct labor, commissions, shipping costs, and utilities

used in production.

• Cost Behaviour: Analyze how each cost driver reacts to changes in production volume.

Does the cost increase proportionally (direct) or at a different rate (semi-variable)?

• Historical Data: Gather historical cost and production data to establish benchmarks

and identify trends.

Step 2: Cost Estimation and Budgeting

• Cost Estimation Techniques: Utilize techniques like engineering estimates, vendor

quotes, and historical data analysis to estimate the variable cost per unit of production.
 • Budgeting: Develop a flexible budget that accounts for different production levels.

Zero-based budgeting, where each expense is justified, is ideal for variable cost control.

Step 3: Implementing Control Measures

This is where you establish procedures to keep variable costs in check. Here are some key

strategies:

• Negotiate with Suppliers: Leverage your buying power to negotiate better prices for

raw materials and other supplies. Consider bulk discounts, longer payment terms, or

signing contracts with reliable vendors.

• Inventory Management: Implement a lean inventory system to minimize storage costs

and prevent stockouts that disrupt production and necessitate rush orders at higher

prices. Utilize forecasting techniques to maintain optimal stock levels.

• Waste Reduction: Analyze production processes to identify and eliminate waste. This

could involve optimizing material usage, minimizing scrap, and streamlining

workflows.

• Standardization: Standardize processes and material specifications to ensure

consistent quality and prevent inefficiencies.

• Automation: Explore automation opportunities to reduce reliance on direct labor, a

significant variable cost in many industries.

• Performance Monitoring: Regularly monitor actual variable costs against budgeted

amounts. Utilize variance analysis to identify discrepancies and investigate root causes.

Step 4: Continuous Improvement

Variable cost control is an ongoing process. Here's how to ensure continuous improvement:
 • Regular Reviews: Conduct periodic reviews of your cost control measures. Evaluate

their effectiveness and adapt them as needed.

• Benchmarking: Compare your variable cost performance with industry benchmarks to

identify areas for improvement.

• Employee Engagement: Encourage employee participation in cost-saving initiatives.

Empower them to identify and report inefficiencies.

Additional Considerations

• Technology: Utilize cost management software to automate data collection, analysis,

and reporting. This facilitates real-time monitoring and improves decision-making.

• Cost Allocation: Develop a system for allocating variable costs accurately to different

products or services. This helps identify areas with higher cost needs and allows for

targeted cost-control efforts.

Conclusion

By implementing a well-defined variable cost control mechanism, businesses can achieve

significant cost savings and enhance profitability. The key lies in a comprehensive

understanding of variable costs, proactive budgeting, and continuous monitoring and

improvement. By following the steps outlined above and adapting them to your specific

business context, you can establish a robust system for managing variable costs and achieving

long-term financial success.

Q. Briefly discuss how to develop a basic account balance sheet
and show a copy of a small balance sheet.

Ans:
Developing a basic account balance sheet involves several steps:

1. Identify Categories: Determine the main categories for your account sheet, typically
assets, liabilities, and equity.

2. List Assets: Under the assets section, list all items the company owns that have value,
including current assets (like cash, accounts receivable, and inventory) and fixed
assets (such as property, plant, and equipment).

3. List Liabilities: In the liabilities section, include all obligations the company owes,
including current liabilities (like accounts payable and short-term loans) and long-
term liabilities (such as long-term loans and bonds payable).

4. Determine Equity: Equity represents the ownership interest in the company. Include
common stock, retained earnings, and any additional paid-in capital.

5. Organize and Total: Organize each category into subcategories if needed, and list
the amounts for each item. Total each category to ensure it balances.

6. Prepare the Balance Sheet: Once all items are listed and totaled, prepare the balance
sheet by listing assets on one side and liabilities and equity on the other. The total
assets should equal the total liabilities and equity, ensuring the balance sheet
"balances."

7. Review and Adjust: Review the account sheet for accuracy and completeness. Make
any necessary adjustments to ensure all financial information is accurately reflected.

8. Regular Updates: Update the account sheet regularly to reflect changes in the
company's financial position, such as new assets acquired, liabilities settled, or
changes in equity.
By following these steps, you can develop a basic account sheet to track your company's
financial position effectively.

ABC COMPANY
Balance Sheet
As Of May 1st, 2024
Assets:
Current Assets:
- Cash: $10,000
- Accounts Receivable: $5,000
- Inventory: $7,000
Fixed Assets:
- Property, Plant, and Equipment: $50,000
- Vehicles: $20,000 -
Machinery: $30,000
Other Assets:
Investments: $15,000
Intangible Assets: $8,000
Total Assets: $145,000

Liabilities
Current Liabilities:
Accounts Payable: $6,000
- Short-term Loans: $3,000
- Accrued Expenses: $2,000
Long-term Liabilities:
Long-term Loans: $40,000
Bonds Payable: $20,000
- Other Liabilities:
Deferred Tax Liabilities: $5,000
Total Liabilities: $76,000
Equity:
Common Stock: $30,000
Retained Earnings: $32,000
Additional Paid in Capital: $7,000
Total Equity: $69,000
Total Liabilities and Equity: $145,000

Q: COMPARE AND CONTRAST BETWEEN SALES PROMOTION AND

ADVERTISEMENT

MEANING OF SALES PROMOTION

A sales promotion is a marketing strategy in which a business uses a temporary campaign or
offer to increase interest or demand in its product or service. There are many reasons why a
business may choose to use a sales promotion (or ‘promo’), but the primary reason is to boost
sales. Sales boosts may be needed to reach a quota as a deadline approaches, or to raise
awareness of a new product.
MEANING OF ADVERTISING: Advertising is the action of calling public attention to an
idea, good, or service through paid announcements by an identified sponsor. SALES
PROMOTION
Definition, examples, ideas, and types
Sales promotions allow companies short-term revenue boosts through a wide variety of
customer benefits.
By Donny Kelwig, Contributing Writer
Sales strategy
No matter how successful a business is, every company is going to find moments where they
need a sales boost. It might be towards the beginning to build a customer base, or somewhere
down the line when sales are slow.
This is the time for a sales promotion.
In this piece, we’re going to discuss what a sales promotion is, the types of sales promotions,
the pros and cons of using them, and the best strategies for your company. We’ll also talk about
how a strong CRM program can help you execute your sales promotions for maximum benefits.
Sales promotion definition
A sales promotion is a marketing strategy in which a business uses a temporary campaign or
offer to increase interest or demand in its product or service. There are many reasons why a
business may choose to use a sales promotion (or ‘promo’), but the primary reason is to boost
sales. Sales boosts may be needed to reach a quota as a deadline approaches, or to raise
awareness of a new product.
Let’s take a closer look at different types of sales promotions, as well as the pros and cons of
using any type of promotion.
Types of sales promotion
3

There are 12 main types of sales promotions. Not all of them are suited for every business,
product, or service, but each one offers unique ways of boosting sales and connecting with
customers through different methods of sales psychology. Each is also an interesting take on
spin selling and offers a look into sales methodology comparison.
1. Competitions and challenges: Competitions or challenges usually take place on social media,
and serve to increase customer engagement as fans try to win a discounted or free product.
They usually also result in a large amount of free publicity if the competition or challenge
involves sharing the brand on a customer’s personal social media account.
2. Product bundles: Product bundles offer a collection of products for an overall discounted
rate, as opposed to buying the products individually. Product bundles give customers a reason
to buy a larger variety of products, which makes it more likely they will find a product they
like and want to buy again.
3. Flash sales: Flash sales are extremely short sales that offer extreme discounts for a limited
amount of time. These sales work through creating a sense of urgency and need around your
sale.
4. Free trials: Free trials or demos are one of the most common sales promotions and one of
the most promising strategies to grow a customer base. Businesses can offer either a limited
time with the product or a limited quantity of the product to a first-time buyer at no charge to
see if they like it.
5. Free shipping and/or transfers: Free shipping promotions attempt to curb the 70% of
customers who abandon their carts when they see the shipping costs. The small loss in shipping
fees is usually made up for in happy customer purchases.
6. Free products: Free product promotions work by offering a small free product with the
purchase of a larger, mainstream product. This boosts mainstream sales without costing the
company too much inventory or revenue.
7. Early-bird or first-purchaser specials: These specials offer discounts to first-time purchasers
as a way of welcoming them as customers. Customers are more likely to buy at a discount and
because the discount only works once, the company doesn’t lose a great deal of revenue.
8. BOGO specials: BOGO, or “buy one, get one free” promotions are primarily used to spread
product awareness. Customers can give their extra product to a friend or family member and
build a customer base through word of mouth.
9. Coupons and vouchers: Coupons and vouchers reward current customers for their brand
loyalty and encourage future purchases. This is especially effective in companies who use
punch cards which incentivize customers to make multiple purchases to earn a free product.
10. Upsell specials: Upsell promotions are not as common as the others, but they can still be
extremely effective. Upsells give first-time customers a less expensive version of a product to
try, and then over time, the sales department works to convince them to purchase the more
expensive and more effective option.
11. Subscriptions: Subscriptions are not always considered sales promotion, since they tend to
be long-term purchases, but having different amounts of a product available at a different price
point is a sales promotion tactic. With a subscription, a customer pays a larger fee upfront for
a large amount of product that eventually comes out to less than what they would pay for buying
smaller amounts of product individually.
12. Donations: Donations are an excellent way for a company to build credibility and goodwill
within the customer base. Most donations work when the company contributes a portion of
each sale during a given period to a charitable cause.
Pros of sales promotions
There are many benefits to running a sales promotion in the short term:
Creating new leads
Introducing a new product
Selling out overstock
Rewarding current customers
Increasing last-minute revenue
Sales promotion example
Perhaps the most common sales promotion is the Black Friday sale. This is an interesting sales
promotion to examine because while thousands of companies participate in Black Friday, few
participate in the same way.
Some companies run their Black Friday sales within a strict 24 hours time frame, while some
spread it over an entire week. Some have in-person offers, or online offers, or are exclusive to
one type of purchase.
The important factor in the Black Friday sale is that companies know customers are going to
buy. This makes it crucial to have a strong sales promotion strategy and sales territory plan so
that you know what you’re offering, what your price points are, the exact sales windows, and
your audience targets.
Sales promotion strategies
There are three primary strategies for sales promotions:
Pull strategy: The pull strategy tries to get the customer to ‘pull’ the product away from the
company, usually in the form of a discount, BOGO, or another special. This is the most
commonly used strategy across the board for all businesses.
Push strategy: The push strategy tries to ‘push’ the products away from the company towards
the customer, usually through B2B sales. Parent companies will reward distributors and
retailers for taking additional products off their hands and selling them to the consumers.
Hybrid strategy: As its name suggests, the hybrid strategy is a combination of the push and
pull strategy in which the company will use a push strategy to move products, and then a pull
strategy to encourage purchasing from retailers.
Sales promotion techniques
1. Know your audience: Are you catering to new customers or existing customers? Are you
looking to promote a new product or increase sales on an existing product? These questions
will help you choose which sales promotion is best for your company at that time.
2. Emphasize scarcity and/or urgency: Your sales promotion should always be short-term,
but it’s important to emphasize why. Customers will be more motivated to buy if there’s a risk
of running out of time or running out of product. 3. Align your sales promotion with your
company: Consistency is always key in every aspect of sales, and it’s no different with a sales
promotion. If you specialize in long-term products, such as electronics, then it doesn’t make
sense to offer customers a subscription package when they’re only going to purchase new
products every few years.
ADVERTISEMENT – AN INTRODUCTION
Advertising is a powerful communication force, highly visible, and one of the most important
tools of marketing communications that helps to sell products, services, ideas and images, etc.
Many believe that advertising reflects the needs of the times. One may like it or not but
advertisements are everywhere. Advertisements are seen in newspapers, magazines, on
television and internet and are heard on radio. The average consumer is exposed to a very large
number of advertisements every day, particularly the urban and semi-urban population. It
seems almost impossible to remain totally neutral and not take any notice of modern day
advertising. The most visible part of the advertising process is the advertisements that we see,
read, or hear and praise or criticize. Many suitable adjectives are used to describe advertising,
depending on how an individual is reaching, such as great, dynamic, alluring, fascinating,
annoying, boring, intrusive, irritating, offensive, etc. Advertising is an indicator of the growth,
betterment and perfection of civilization. Itis part of our social, cultural and business
environment. It is not at all surprising that advertising is one of the most closely scrutinized of
all business institutions. In today’s environment, not only are advertisers closely examined by
the target audience for whom that advertisement are meant, but by society in general.
MEANING OF ADVERTISING: Advertising is the action of calling public attention to an
idea, good, or service through paid announcements by an identified sponsor. What is
advertisement? Any paid form of non- personal presentation and promotion of ideas, goods or
services through mass media such as newspapers, magazines, television or radio by an
identified sponsor.
OBJECTIVE OF ADVERTISEMENT
1. To increase support: advertising increases the morale of the sales force and of distributors,
wholesalers and retailers.
2. To stimulate sales amongst present, former and future customers. It involves decision
regarding the media.
3. To retain loyalty: to retain loyalty of present and former consumers.
4. To protect an image: advertising is used to promote an overall image of respect and trust for
an organization.
5. To communicate with consumers: this involves regarding copy.
Advertising generally includes the following forms of medium:
The messages carried in-

➢ Newspapers and magazines;

➢ Radio and television broadcasts;

➢ Circular of all kinds, (whether distributed by mail, by person, thorough tradesmen, or by

inserts in packages);

➢ Dealer help materials,

➢ Window display and counter – display materials and efforts;

➢ Store signs, motion pictures used for advertising,

TYPES OF ADVERTISING
Advertising is the promotion of a company’s products and services though different mediums
to increase the sales of the product and services. It works by making the customer aware of the
product and by focusing on customer’s need to buy the product. Globally, advertising has
become an essential part of the corporate world. Therefore, companies allot a huge part of their
revenues to the advertising budget. Advertising also serves to build a brand of the product
which goes a long way to make effective sales.
There are several branches or types of advertising which can be used by the companies. Let us
discuss them in detail.
1. Print Advertising - The print media has been used for advertising since long. The
newspapers and magazines are quite popular modes of advertising for different companies all
over the world. Using the print media, the companies can also promote their products through
brochures and fliers.
2. Broadcast Advertising - This type of advertising is very popular all around the world. It
consists of television, radio, or Internet advertising. The ads on the television have a large
audience and are very popular.
3. Outdoor Advertising - Outdoor advertising makes use of different tools to gain customer’s
attention. The billboards, kiosks, and events and tradeshows are an effective way to convey the
message of the company.
4. Covert Advertising - This is a unique way of advertising in which the product or the
message is subtly included in a movie or TV serial.
5. Public Service Advertising - As evident from the title itself, such advertising is for the
public causes. There are a host of important matters such as AIDS, political integrity, energy
conservation, illiteracy, poverty and so on all of which need more awareness as fares general
public is concerned. This type of advertising has gained much importance in recent times and
is an effective tool to convey the message

QUESTION: EXPLAIN BRIEFLY WHAT IS ESTIMATED COST FOR

OPERATIONAL CONTROL. GIVE EXAMPLES?

The estimated cost for operational control refers to the projected expenses
associated with managing and maintaining operational activities within an
organization. It involves forecasting the costs related to various operational
functions such as production, distribution, administration, and support services.
These costs are crucial for budgeting, decision-making, and ensuring the
efficient allocation of resources.

Here are some key components and examples of estimated costs for operational
control:

1. Labor Costs: This includes salaries, wages, benefits, and training expenses for
employees involved in operational activities. For example, in a manufacturing
company, the estimated cost for labor would cover wages for assembly line
workers, supervisors, and maintenance technicians.

2. Material Costs: These are the expenses related to purchasing raw materials,
components, and supplies necessary for production. For instance, in a
restaurant, material costs would encompass the prices of ingredients used in
preparing dishes.

3. Overhead Costs: Overhead costs include indirect expenses that are not
directly tied to production but are necessary for operations to run smoothly.
This can include rent, utilities, insurance, and depreciation of equipment. An
example would be the cost of leasing office space for administrative staff in a
corporate office.

4. Equipment Costs: This refers to the expenses associated with acquiring,

maintaining, and repairing machinery, tools, and technology required for
operational processes. For example, in a construction company, equipment
costs would involve the purchase or rental fees for bulldozers, excavators, and
cranes.

5. Transportation Costs: These are the costs incurred for transporting goods or
personnel between different locations. For instance, in a logistics company,
transportation costs would include fuel expenses, vehicle maintenance, and
driver salaries.

6. Quality Control Costs: This includes the expenses related to monitoring and
ensuring the quality of products or services. Examples include the cost of quality
inspections, testing equipment, and staff training on quality assurance
procedures.

7. Inventory Costs: Inventory costs involve the expenses associated with storing,
managing, and tracking inventory levels. This includes warehouse rent,
inventory management software, and costs related to inventory obsolescence
or shrinkage.
8. Administrative Costs: Administrative costs cover the expenses of managing
and overseeing operational activities, including salaries for administrative staff,
office supplies, and expenses related to communication and office
infrastructure.

9. Training and Development Costs: Costs associated with providing ongoing

training and development programs for employees to ensure they have the skills
and knowledge necessary to effectively carry out operational control tasks.

10. Compliance and Regulatory Costs: Expenses related to ensuring that

operations comply with relevant laws, regulations, and industry standards. This
may include fees for obtaining certifications, conducting audits, or
implementing compliance monitoring systems.

11. Contingency Funds: Setting aside funds to address unforeseen issues or

emergencies that may arise during operations, such as equipment breakdowns,
supply chain disruptions, or quality control failures.

By estimating these various costs, organizations can make informed decisions

regarding resource allocation, pricing strategies, and operational improvements
to optimize efficiency and profitability..

Methodology for Estimation:

1. Historical Data Analysis: Organizations can analyze past expenses to identify

trends and patterns, helping to predict future costs.

2. Budgeting and Forecasting: By creating detailed budgets and financial

forecasts, organizations can estimate future operational costs based on
expected activities and performance.
3. Cost Estimation Techniques: Various techniques such as cost estimation
models, regression analysis, and cost-volume-profit (CVP) analysis can be used
to estimate operational costs more accurately.

Importance:

1. Budgeting and Planning: Estimated operational costs form the basis for
developing budgets and financial plans, enabling organizations to allocate
resources effectively.

2. Decision Making: Accurate cost estimates provide valuable information for

decision-making processes such as pricing strategies, investment decisions, and
cost reduction initiatives.

3. Performance Evaluation: By comparing estimated costs with actual expenses,

organizations can assess their operational performance and identify areas for
improvement.

In summary, estimating operational costs is essential for effective financial

management and decision-making within organizations. By accurately
forecasting expenses, organizations can optimize resource allocation, improve
cost control, and enhance overall operational efficiency and profitability.

QUESTION: BRIEFLY DISCUSS MARKETING AND MARKET

RESEARCH. DISCUSSREDUCTION BY TIME SERIES
ANALYSIS?

In today's fast-paced and competitive business landscape,

understanding the intricacies of marketing and market research is
crucial for success. Marketing and market research are
interconnected concepts that help businesses identify customer
needs, create value, and drive growth. However, with the vast
amounts of data available, it can be challenging to make sense of it
all. This is where time series analysis comes in - a powerful statistical
technique that helps simplify complex data, identify patterns, and
make predictions. By applying time series analysis to marketing and
market research, businesses can reduce waste, optimize processes,
and make informed decisions to stay ahead of the competition.
MARKETING
Marketing is a multidimensional activity, which entails understanding
customer needs, creating value, and communicating such values to
potential customers. Marketing further involves a multiplicity of
activities that can be best listed as follows:
1. Advertising: Utilizing a wide range of media as a platform for
marketing goods or services
2. Branding: Giving a product or service an identity, making it special
3. Product development: The process of introducing new products or
services that will meet customers' need
4. Pricing: A process of setting the most suitable price for a product
or service. L
5. Distribution: The aspect of putting products or services in the
hands of the customers.
6. Selling: Turning prospects into customers.
This can only be done if one understands their audience in-depth,
the trend in the industry, and general market condition. It revolves
around the development of a marketing mix that combines the
target audience and business results.
MARKET RESERCH
On the other hand, market research basically entails the procedure
of collecting information and analyzing it concerning the target
market, competitors, and customers is done so to provide insights
that would help in making marketing decisions and strategy. Market
research encompasses:
1.Survey
2. Focus group
3. Interview and secondary data source data collection techniques
4. Analyzing data in search of trends
5. Patterns, and
6. Insights-Application of insights to the marketing strategies and
tactics.
Market research enables firms to understand their customers' wants,
needs, and behaviors with greater clarity. It pinpoints the
opportunities and challenges in the market, business, and marketing
trends, thereby leading to effective development of means to solve
them.
KEY VARIATIONS:
1. The Market research gathers information that should direct
marketing decisions
2. Marketing is the activity-oriented discipline; market research is the
knowledge-oriented discipline.
Effective marketing entirely depends on quality market research, rich
in an understanding of the customer's wants, preferences, and
behaviors. It is therefore paramount that businesses do conduct
market research to understand their customers, which in return
leads to the right focusing of marketing campaigns to ensure
business results.
BENEFITS OF MARKETING RESEARCH
1. Decisions on marketing to be marked
2. Identification of market opportunities and challenges
3. Understands the needs and desires of customers
4. Development of effective marketing strategies
5.Competitive advantage.
BENEFITS OF MARKETING
1. Enhanced brand awareness
2. Lead generation and conversion
3. Growth in Revenue
4. Customer engagement and loyalty
5. Competitive advantage
Marketing and market research are two integral concepts of today's
business world, which work cooperatively to achieve the success of a
business in a competitive market. While marketing itself is a process
involving promotion and selling of goods or services, it is evident that
market research is going to provide insights and information
required to support decisions in marketing strategy. The crux of the
matter is that it will only be through the active practice of market
research and development of effective marketing strategies that a
business will steer business results, obtain a competitive advantage,
and ensure long-term success.
REDUCTION BY TIME SERIES ANALYSIS
Time series analysis is a statistical method used to analyse and
interpret data that is collected over a period of time, specifically
focusing on identifying and understanding trends. Time series data
refers to data that is gathered at various time intervals. This en
compasses a wide range of data, such as the fluctuation in onion
prices during a year, the population variations in a town at different
times of the day, or the temperature changes in a city over the
course of a month.
One of the difficulties encountered when working with time series
data is the presence of a large number of dimensions, which can
make the methods used for data mining more complex. This is where
reduction methodologies are employed. Dimensionality Reduction is
commonly considered as a highly effective approach to tackle these
problems. The process entails decreasing the quantity of
unpredictable factors being examined by acquiring a collection of
primary variables. This process can streamline the data while
retaining a significant amount of information, hence facilitating the
exploration and visualization of the data.
Time series analysis offers various techniques for reducing
dimensionality, including Principal Component Analysis (PCA),
Fourier Methods for Sufficient Dimension Reduction, and DROP.
Dimensionality Reduction is commonly considered as a potent
approach to tackle these problems. It includes minimizing the
number of random variables under attention, by getting a collection
of primary variables. This can simplify the data without sacrificing
much information, and make the data easier to examine and
visualize.
One method for dimensionality reduction in time series analysis is
Principal Component Analysis (PCA). An approach based on PCA,
named "piecewise representation based on PCA" (PPCA), has been
proposed. PPCA separates multivariate time series into many
sequences, calculates the covariance matrix foreach of them in terms
of the variables, and utilizes PCA to find the principal components in
an average covariance matrix. The results of the experiments,
including retained information analysis, classification, and a
comparison of the central processing unit time consumption, reveal
that the PPCA method used to reduce the dimensionality in
multivariate time series is superior to the preceding methods.
Another technique is the Fourier Methods for Sufficient Dimension
Reduction. In the context of time series analysis, this method focuses
on the estimate and inference of conditional mean and variance
functions. By employing central mean and variance dimension
reduction subspaces that preserve sufficient information about the
response, one may effectively estimate the unknown mean and
variance functions of the time series.
There's also a method called DROP, which uses information about
downstream analytics jobs to utilize as few samples as required to
lower the overall workload runtime, while satisfying limitations on
the reduction quality.
RELATION TO INDUSTRIAL ORGANISATION AND MANAGEMENT.
Operational Efficiency: Time series analysis can be used to monitor
and analyze the behavior of industrial machines and equipment. This
allows companies to improve their operations and efficiency.
Forecasting and Decision Making: Time series analysis is used to
determine a good model that can be used to forecast business
metrics such as stock market price, sales, turnover, and more. It
allows management to understand timely patterns in data and
analyses trends in business metrics. By tracking past data, the
forecaster hopes to get a better than average view of the future.
Supply Chain Management: In fields such as supply chain
management, time series analysis can help in forecasting demand,
managing inventory levels, and optimizing logistics.
Financial Management: In finance, time series analysis can be used
to forecast revenues, costs, and financial performance, which are
crucial for budgeting and financial planning.
Risk Management: Time series analysis can also be used in risk
management to identify potential risks and develop strategies to
mitigate them.
Reduction by time series analysis is a powerful tool for simplifying
high-dimensional data, making it easier to analyses and draw
meaningful conclusions. It's important to choose the right reduction
technique based on the specific characteristics and requirements of
your data. When applied to industrial organization and management,
it can provide valuable insights that can help make informed
decisions, improve efficiency, manage risks, and ultimately enhance
profitability.
CONCLUSION
Marketing and market research are crucial for business success, but
complex data can hinder decision-making. Time series analysis
simplifies data, identifies patterns, and makes predictions, enabling
businesses to reduce waste, optimize processes, and make informed
decisions. By applying time series analysis, businesses can gain a
competitive edge, improve forecasting accuracy, and drive
innovation, setting them up for long-term success.

Compare and contrast cost and estimation stating the merits and demerits of each.
ANSWER
In the realm of project management, accurate Financial Planning is paramount. Two crucial
tools that aid in this endeavor are costing and estimation. While they share the goal of
predicting project expenses, they differ in their level of detail and application. This essay will
delve into the merits and demerits of cost and estimating, highlighting their strengths and
weakness to shed light on when each approach is most beneficial.
Costing:
Costing refers to the meticulous process of Identifying and calculating all potential
expenditures associated with a project.
It Involves a comprehensive analysis of all project elements, Including materials, labor,
equipment, permits, overhead costs, and potential risks. Costing often utilizes historical data,
vendor quotes, and industry benchmarks to arrive at the most accurate cost picture possible.
Merit of costing:
Enhanced Accuracy: The In-depth analysis Inherent In costing results in a more precise
financial picture. This minimizes the risk of budget overruns and ensures efficient resource
allocation.
Improved Decision- Making: With a clear understanding of project costs, stakeholders can
make informed decisions about resource allocation, project scope, and potential cost saving
measures.
Increase Transparency: A detailed cost break down Fosters transparency and accountability
within the project team. Everyone Involved has a clear understanding of how resources are
being used.
Reduced Risk: Costing helps Identify potential cost drivers and risks early on. This allows for
proactive mitigation Strategies, reducing the likelihood of unforeseen expenses derailing the
project.
Improve Bidding and Negotiation: A detailed cost breakdown empowers project managers to
negotiate better deal with vendors and supplier- They can identify areas where cost savings are
possible and leverage their knowledge of true project costs to ensure the best value.
2

Benchmarking and performance tracking: Costing data can be used to establish Internal
benchmarks similar projects in the Future. This allows for performance tracking and continuous
improvement in cost estimation and project execution.
Risk Management and contingency planning: The in- depth analysis of potential cost drives
allows for proactive risk management strategies By Identifying area of high cost variability,
contingency plans can be formulated to mitigate financial Impact if these risks materialize.
Demerits of costing
Time consuming: Costing can be a lengthy and resource intensive process, especially for
complex projects. Gathering detailed data and compiling estimates can significantly delay the
project's Initiation.
Limited flexibility: Costing is most effective for well-defined projects with a clearly
established scopes changes to the scope may require significant revisions to the cost
breakdown, adding complexity.
Data Dependence: The accuracy of costing hinges on the reliability of the data used inaccurate
historical data of faulty quotes can lead to misleading cost projections.
Limited Scalability: Costing can become unwidely for very large or complex projects with
extensive requirements. The time and effort required for detailed analysis might not be justified
for smaller projects with simpler needs.
Potential for Scope Creep: The focus on minute in costing can lead to “scope creep" where
additional elements are needed to the project without a corresponding revision to the budget.
Data Overload and Decision paralysis: The sheer amount of data generated through costing
can overwhelm stakeholders. This Information overload can lead to decision paralysis,
hindering process:
Estimating
Estimating on the other hand, is a more preliminary approach to project Finances. It involves
making educated guesses about potential cost based on experience, Industry averages, or
similar projects Estimates are often expressed as a range to account for uncertainties.
Merits of Estimating:
Time - Efficient: Estimating is a quicker approach compared to costing. This allows for a faster
planning cycle and earlier project initiation.
Flexibility: Estimating is well suited for projects where the scope is still evolving. Adjustments
to the estimate can be made as the project progresses and details become clearer.
Budget setting: Even rough estimates offer a starting point for budgeting discussions. These
can be refined as a project progresses.
Feasibility Assessment: Estimates can be used to assess the financial feasibility of a project at
an early stage. This can help in making critical go/no-go decisions.
Enhanced communication and Stakeholder Buy- In: Early estimates provide a framework for
communication with stake-holders. Sharing a ballpark figure Fosters a clearer understanding
of the project's financial implications and helps to secure stakeholders buy-in.
Adaptability to Agile Methodologies: The flexible nature of estimates aligns well with agile
project management methodologies. Estimate can be continuously refined as project
requirements evolve and new information becomes available.
Encourages Creativity and Innovation: Estimates, by their nature, leave room for exploring
alternative approaches. This can stimulate brainstorming and encourage innovative solutions
to achieve project goals within budget constraints.
Demerits of Estimating
Low Accuracy: Estimates, by their nature, are prone to Inaccuracies. Unforeseen circumstances
and project complexes’ can lead to significant deviations from the Initial estimate.
Limited Decision- Making: Rely solely on estimates can hinder Informed decision- making
due to their lack of precision.
Potential for Underfunding: Inaccuracies In underestimation can lead to budget short falls,
impacting project completion.
Over- Optimism and Budgetary shortfalls: A tendency towards optimism in estimating can lead
to underestimating project costs- This can result in budget shortfalls later in the project,
Jeopardizing project completion or necessitating budget revisions.
Difficulty in securing funding: Investors or stakeholders might be hesitant to commit resources
based solely on estimates. Detailed costing can be necessary to secure the necessary funding
for larger projects.
Reduced Accountability: Over-reliance on estimates can foster a less rigorous approach to cost
management, without a detailed breakdown of project costs, there's a risk of reduced
accountability regarding financial stewardship.
In conclusion, both costing and estimating play critical roles in project financial management.
By understanding their Strengths and weaknesses, project managers can employ them
strategically for informed decision- making and successful project execution. The most
effective approach often involves a judicious combination of both techniques, tailored to the
specific needs of the project at hand.

Cost and estimation are two related but distinct concepts in project management:
Similarities:
1. Both deal with financial aspects of a project.
2. Both aim to ensure project deliverables are met within financial constraints.
3. Both involve quantitative analysis and numerical values.

Differences:
1. Purpose:
COSTING
Focuses on determining the actual cost of a project or activity.
While
ESTIMATION
Aims to predict the likely cost or duration of a project or activity.
2. Timing:
COSTING
Typically done after the project is completed, to calculate actual costs.
While
ESTIMATION
Done during project planning, to predict costs and create a budget.

3. Accuracy:
COSTING
Based on actual data, so accuracy is Subject to uncertainty and
While
ESTIMATION
high. assumptions, so accuracy may vary.
4. Scope:
COSTING
Focuses on the project's financial performance.
While
ESTIMATION
Encompasses various aspects, including cost, duration, and resource allocation.

5. Methodology:
COSTING
Involves accounting and financial analysis.
While
ESTIMATION
Utilizes various techniques, such as analogy, parametric, or bottom-up estimation.

6. Output:
COSTING
Provides actual cost figures.
While
ESTIMATION
Yields estimated costs, durations, or resource requirements.

In summary, costing is about determining actual costs after project completion, while
estimation is about predicting costs and resources needed during project planning. Both are
essential in project management to ensure financial control and successful project delivery.