CGFO Financial Administration 2

  1. What are 3 risk exposures
    1Property insurance –damage and loss of property

    2Liability insurance –negligence in performance◦Includes elected and appointed officials◦Errors and omissions policy

    3Workers’ compensation –medical coverage for job-related injuries- Most costly
  2. Exposure Liability
    • Workers’ compensation 52%
    • ◦Liability 35%
    • ◦Property 13% 

    Workers’ compensation is 1.3% of payroll
  3. Risk Manager
    Needs to be aware of all types of risk.

    • Monitor the three largest areas
    • ◦One-time projects
    • ◦Geography
    • ◦Unique services
  4. Role of Risk Retention
    • Lower premiums
    • Align incentives
    • Create safer work environment

    *Sometimes unintentional as a result of being unaware of exposure and failing to insure for risks
  5. Risk Pool
    • Vehicle for government to pool funds
    • Affordable cost through economies of scale
    • Provide services to reduce risk
  6. Evaulate Risk Alternatives
    • Risk finance
    • Pay premiums
    • Contribute to pool
    • Pay claims (self-insurance)

    • Risk prevention
    • Little on administration
    • Evaluate loss control / prevention
  7. Measure Risk Results
    • Benchmark or Performance Measurement
    • Reliable date
    • Relevant benchmarks
    • Meaningful comparisons

    • Types
    • Workload
    • Efficiency
    • Effectiveness
  8. Management Functions- Acronym
    • (PODSC)
    • Planning
    • Organizing
    • Staffing
    • Directing
    • Controlling
  9. Planning objective
    • Decide which objectives / goals to pursue
    • Decide when they will be achieved
    • Decide what resources to devote
    • Logical –formal or informal
    • Can’t evaluate results without planning
  10. Decision Making objectives
    • Select a course of action from among alternatives
    • Attempt to reach goals
    • Understand course necessary to reach goal
    • Ability to analyze alternatives
    • Desire to optimize results
  11. Organizing Objectives
    • Establish structure of roles
    • ◦List activities to achieve purpose
    • ◦Group activities
    • ◦Assign activities
    • ◦Delegate authority
    • ◦Coordinate communication

    Efficiency will contribute to success
  12. Organization by Department
    • Departments by function
    • ◦Department by territory
    • ◦Department by project
  13. Delegation
    Results Expected –goals set, communicated, and understood

    Functional Definition-authority, delegated, responsible individuals contribute, activities undertaken

    Scalar Principle –direct authority relationship superior to subordinate

    Authority-level Principle –includes functional definition and scalar principle, responsible person should make decision, not refer upward
  14. Delegation 2
    Unity of Command –good reporting relationship with superior reduces conflict and results in personal responsibility

    Absoluteness of Responsibility –Subordinate must accept responsibility from superiorSuperior cannot escape responsibility for subordinate

    Parity of Authority and Responsibility –Authority –the right to carry out task Responsibility –is the obligation to accomplishAuthority = Responsibility
  15. Staffing
    • Manning positions created by organizational structure
    • ◦Define manpower
    • ◦Inventory candidates
    • ◦Select, compensate, and train
    • ◦Develop all to accomplish tasks
  16. Directing
    • Guiding and leading subordinates
    • ◦Set objectives
    • ◦Measure results

    Success is knowledgeable, well trained people who work efficiently toward objectives
  17. Controlling
    • Measure and correcting activities of subordinates
    • Locate person responsible
    • Take steps to improve performance

    Control things by controlling what people do

    Process improvements serveEliminate variationImprove flow and speed
  18. Span of Control
    • Magic number to effectively control
    • Upper level –four to eight
    • Lower level –eight to fifteen

    • Wide variety of practices
    • Manager must know limits

    • Problems with multiple levels
    • Expensive
    • Complicates communication
    • Dilutes planning and control
  19. Types of Plans
    • Objectives –goal to which activity is aimed
    • Policies –guide or channel thinking of subordinates
    • Strategies –competitive plan of action to emphasize and attain comprehensive objectives
    • Procedures –customary method to handle future activities
  20. Major Principles of Organizing
    • Cause –Span of Management
    • Cement –Authority
    • Framework –Departmentized Activities
    • Measure -Effectiveness
  21. Span of Management
    Number of people an individual can effectively manage that varies based on variable including time requirements to effectively manage.

    No limits would result in an unorganized enterprise with only one manager.

    Organization utilizes individuals to accomplish objectives at minimal cost for efficiency.
  22. Authority
    • Tool for a manager to create an environment for individual performance.
    • ◦Scalar
    • ◦Delegation
    • ◦Absoluteness
    • ◦Parity
    • ◦Unity
    • ◦Authority-level
  23. Departmentalized Activities
    • The framework developed to assign activities
    • Division of work –structure should reflect tasks necessary to attain goals
    • Design roles to fit individual capabilities
    • Functional definition –a clear definition of expectations contributes toward accomplishing objectives
    • Separation –responsible party cannot be separated from individual charged with task
  24. Effectiveness
    • Apply principles to measure the total organizational process
    • ◦Balance
    • ◦Flexibility
    • ◦Leadership
  25. Leadership
    • Art of inducing subordinates to accomplish assignment with zeal and confidence
    • ◦Guide
    • ◦Conduct
    • ◦Direct
    • ◦Precede
    • Contribute to organization with maximum capability
    • Reacts to the situation
  26. System
    • Set of things connected to form a complex unity
    • A whole composed of parts according to a scheme
    • ◦Open –constant relationships between and within environment
    • ◦Closed –all is conducted within environment
    • ISO 9000 –a quality management system
  27. Management is a System
    • Composed of many sub-systems
    • Characterized by cause and effect (open –loop)
    • Characterized by feedback to correct errors (closed –loop)
    • Part of a larger system◦Industrial system◦Social system◦Government system◦Marketing system
  28. Vision Statement
    • Loses value if not adjusted to surroundings
    • Revisit Vision every 5-7 years
    • Involve others to bring to life
    • Leadership must explain
  29. Characteristics of Effective Vision
    • Outcome based –end results
    • Vivid –clear picture
    • Communicable –explained in 5 minutes
    • Inspiring –appeals to spirit
    • Challenging –power to motivate
    • Unique –one of a kindFocused –provide guidance
  30. Performance Management Toolkit
    • Performance Awards –non-financial recognition
    • 360 Degree Appraisal involves
    • –Customers
    • Peers
    • Employees
    • Shared savings
    • Organizational gainsharing
    • Keep a portion of savings for future use
  31. Privatization
    divestiture of both management and assets of public function to the private sector

  32. Outsourcing
    –divestiture of onlythe management of a public function to an outside source
  33. Competition
    provide fair opportunities to qualified vendors to vie against each other to offer the best prices, quality, and service
  34. Kickback
    accepting value to influence award of contract
  35. Price fixing–
  36. arrangement between competitors that interfere with the price
  37. Bid rigging–
    horizontal agreements among competitors to manipulate competitive bidding process
  38. Monopolization
    single firm has control and charge any price without fear of losing business in the market
  39. Bribe
    promise, obligation, gift, or reward in order to secure contract. Attempt to influence outcome, should declare the contract void
  40. Blanket order–
    arrangement with vendor to provide item(s) or service on an as needed basis over-the-counter
  41. The Procurement Team
    • Budget Office
    • Program Manager (or department rep)
    • Purchasing Staff
    • Legal Staff
    • Accounting
  42. A Good Purchasing Policy Has:
    • Performance Measures
    • Vendor selection / preference guidelines
    • A defined way to purchase commodities, services and capital items
  43. NASPO
    National Association of State Purchasing Officials
  44. Competitive Process
    Formal competition if above a certain dollar amount

    Rules regarding limitations on sole source procurement

    Bidder must file affidavits of non-collusion

    Administrative process to challenge solicitations

    Employees disclose interest in competing firms
  45. Competive Process Essential Elements
    • Opening bids are part of public record
    • Gifts of vendors
    • Conditions of long-term contracts
    • Anti-competitive practices
    • Identical low-bid awards
  46. Procurement Objective
    Obtain suitable commodities and services of the highest possible quality at favorable competitive prices
  47. "Low-Bid" Philosophy
    • Cheaper is not better
    • Diminishing concept
    • Balance quality and price = "best value"
    • Fair and impartial process
  48. Why Competitive Practices?
    • Secure sound value
    • Guard against favoritism
    • Provide fair opportunities
    • Promote expertise of private enterprise
    • Encourages best practices
    • Ensures price comparison
  49. Another Attribute
    • Integrity required
    • ◦Fairness◦Openness
    • ◦Impartiality

    Essential to generate and maintain an attitude of competition
  50. Vendor Communications
    • Fair advantage
    • Same information available to all
    • Distant relationship
    • Open communication
  51. Procurement Objectives
    • Analyze the market for products and their element
    • Gather data to understand agency’s need and future use
    • Identify acceptable production level
    • Know laws and rules that affect procurement
    • Determine if technical assistance to write specs is necessary
  52. Standard Specifications
    • Establish norm for the item
    • Limit needs from broad field
    • Emphasize details
    • Incorporate performance standards
  53. Central Procurement Office
    • Use standard specifications
    • Examine program periodically
    • Ensure program is responsive to:
    • ◦New concepts
    • ◦Improved products
    • ◦Advanced applications
    • Be concerned about environment
  54. Central Procurement Officer
    • Develop specs for items purchased under indefinite quantity contracts
    • Involved with policy enforcement
    • Promotes product and price competition
  55. Central procurement office ensures:
    • Rules and procedures are followed
    • ◦Specifications are competitive and suitable
  56. Environmental Issues- Green
    • Specs for recyclables
    • Use of disposable products
    • Refurbished equipmentEnergy consumptions –eval factor
    • Alternative fuel vehicles
    • Manufacturing with chlorofluorocarbons
    • Phosphate based detergency
    • Energy-efficient lighting
  57. Cooperative Procurement
    • Use of common delivery points
    • Shares warehousing facilities
    • Reduces administrative costs
    • Shares information and expertise
    • Create demand to encourage production
  58. Cooperative Objectives & Process
    • Lower prices
    • Favorable terms and conditions
    • Lower administrative costs
    • Increased competition through economies of sale

    • Identify common needs
    • Combine requirements into formal solicitation
    • Utilize legitimate agreement to allow vendor to rely on specific quantities
  59. Cooperative Pitfalls
    • No cost-savings unless all participants buy
    • No enforceability invites abuse
  60. Prompt Payment
    • Pay contractor within 30 days
    • Slow paying affects competition
    • ◦Increased prices
    • ◦Slow cash flow
    • ◦Reduced participation
  61. F.S. 288.705
    State Contracts 
  62. Reinvention Purchasing
    • Managers have purchasing cards
    • Higher purchasing floor
    • Effective information technology
    • Choice and customization available
    • Best-value vs. low-cost
    • Long-term partnership
Card Set
CGFO Financial Administration 2
CGFO Finanical Administration