*** P5 December 2012 Exam *** Instant Poll and comments***

calculated wrong roce on the basis of overall operating profit of 68 which breached the limit 8.7% and then commented on this e.g fines would be imposed ………how much marks would be deducted…..
impact of such constraints:unethical practices
reduction in quality
up side is that they will reduce cost using value anlaysis and bpr ……. plz comment on the suitability of the answer angry hamtaro

h

@sheharyar123 said:
what measures were to suggest in q1 b

@sheharyar123 said:
what measures were to suggest in q1 b

Hi @sheharyar, I must apologize because I didn’t look at the question in detail yet. If you have been applying value analysis and business process re-engineering closely to the case, then you should get worthy credit. Your point on unethical implications do hit the nail on its head.

It’s quite ironic as when the ROCE measure is used in the context of public-service companies, the ROCE measure must be kept low. When we look at the ROCE components in particular, it’s either reducing the mark-up on the water charge, or increase acquisition of assets or subsidiaries through a vertical integration in order to make operations more efficient to reduce the ROCE. (My thought is also to mention the 3E’s measurement model to link with improving public service).

Alas, it ties in with part(a) EVA requirement, which states that as you invest in assets to bring the value up of the company, it will improve EVA and impress the shareholders, who can’t use ROCE to value the worth of a utility company. The EVA management creates a more holistic and ethical public service value-based management behaviour. You can see ROCE is bringing the current management to the wrong direction, and this is clearly not the shareholders would have wanted!

I can see that this can potentially be a very difficult question if one does not keep abreast with read up on news relating to the regulation of the water utility industry. It’s quite interesting that Alex Watt seems to release questions based on a trend of current issues – Ofwat, the water regulator in UK has been hot on the news since 2011. A similar situation exists in my country where the state water company was under immense pressure to reduce price of water despite increasing operational costs, and the inefficiencies of assets employed eventually led to a nearly acute water shortage.

Otherwise it’s safe enough to attempt this question beautifully if you understand EVA and the dysfunctional management behavior of using ROCE.

(ps: Alex Watt still loves cracking our soft heads!)

@wl.obu,@elliem,@msamelia and others who use NFPM non financial performance measures like those in building block model for Q1,b I used the same recomendation too by saying these should be used in conjuction with other financial measures so that over all company to have very good perfomance encompacing major objectives and stakeholders need.So cheers! we will surely get some marks for that.In General it is very difficult to write without thinking what exactly the requirements are and what the examiner is looking for are usually in between the lines and deep in the widely /large scenario so the very challenging thing remains time pressure ….

I didnt write about NFPI at all :(.. thats worrying me

@angryhamtoro but the company has turned into a private ownership why use 3E as its only government regulations involved not thier funding …….its purely a commercial organization now

@sheharyar, I suppose the co is still being monitored under the water regulator, so just saying 3E should be useful, but I won’t go further into it anyway. 🙂

@tabi21, yeah got the feeling P5 passing rate will significantly improve this sitting. 🙂

i am worried that the exam time allocation is too small as compared to the requirements especially Q1 and 2. I could not do the whole 20marks and i fear that the horrible performance for the questions will not earn me pass. This is my fourth sitting to this paper i hope the examiner will recognise my effort. Ofcourse i did a lot of writing in section A.

Where is the poll?????