Business planning and Accounting principles and procedures are mandatory competencies for Building Surveying, and Ewan Craig, APC assessor, offers guidance.
Business planning is key to knowing how your organisation aims to achieve its objectives and, as it covers any technical services offered, it will have a bearing on the other competencies.
Accounting principles and procedures are an integral part of this process and help to inform business decisions.
Business planning particularly influences the technical competencies. One example of this is where building pathology advice is offered, or is intended to be offered. In this case, the business plan will influence: the provision of professional advice; resources such as information services or equipment; staff allocation or recruitment such as chartered surveyors, other professionals or support staff; and the range of building pathology services offered and the geographic coverage.
Both competencies are required to be taken to Level 1.
At Level 1, you should demonstrate knowledge and understanding of how business planning activities contribute to the achievement of corporate objectives.
Accounting principles and procedures
At this level, you should demonstrate knowledge and understanding of accounting concepts and the format and preparation of management and company accounts, including profit and loss statements, cash-flow statements and balance sheets.
These competencies are only required to Level 1 on the Building Surveying pathway, so Level 2 and 3 are not shown in the pathway guide. You should be familiar with issues relating to Business planning and Accounting principles and procedures in your submission documents, and be ready to address questions on them and on related matters.
Actual questions are based on the candidate’s experience, which should be at Level 1 but may exceed this. Two examples are given below:
Using examples, could you please explain your understanding of SWOT analysis?
(This question is aimed at Level 1 candidates. The answer should explain pertinent issues to support your knowledge and understanding)
This is a business tool used to gain a focused understanding, at a given point in time, of the strengths and weaknesses in an organisation and external opportunities and threats – hence “SWOT”. These factors can help shape the business strategy, highlighting areas of concern or advantage for the business. My organisation’s strength lies in having staff with considerable experience in the education sector, though our weakness is that we do not cover a wider range of services and instead focus on just two primary disciplines.
A new opportunity arose thanks to a recent government commitment to provide significantly greater funding to a number of our education clients, specifically for services that my organisation offers. One threat we face would be the bid for work by a new competitor in the past year, which was notably under the market norm and resulted in a reduction in our fee income.
Please tell me about cash-flow statements, with some examples of the factors that may affect cash flow.
A cash-flow statement shows the actual cash flow for the business. It reconciles the income with the business expenditure to give a cash flow for the business over a set period, usually on a monthly basis for the year ahead.
My organisation revises this on an ongoing basis so it is more accurate for the forthcoming month and quarter, and may be reviewed against actual cash flow and business needs. It is an essential business tool for decision-making as it predicts any negative cash flow – when reserves or loans may be needed – and also positive cash flow. This enables my organisation to be proactive in managing cash.
Factors that affect income or expenditure will affect cash flow, and can include: finishing a project early so it can be invoiced and paid, or delays in a payment point that delay an invoice; and winning more work at the same or a greater fee rate to increase income, or being unsuccessful in winning fees, thus reducing income. Factors affecting expenditure can include: increases in staffing that put up costs, or reductions in staff that bring savings; increases in salaries and bonuses at a set pay review being larger than forecast and increasing expenditure, or smaller than expected and thus reducing expenditure.
Given the time constraints of the APC, your answer should be brief but comprehensive. Care should be taken to demonstrate your own skills, abilities and knowledge to the assessors.
Speaking at RICS’ annual It’s Your APC conference, Ewan Craig is an APC assessor and consultant. Article first Published in RICS Building Surveying Journal March-April 2018