The Hindu Business Line : A day has a hundred pockets of time

YOUR day is a mess and you want to organise time effectively. John Adair has put together practical tools and techniques for the purpose in Time Management and Personal Development. The book begins with interesting quotes: "Nothing really belongs to us but time, which even he has who has nothing else (Baltasar Gracian). Time wasted is existence, used is life (Edward Young)." A few more tips:

Dealing with interruptions: Set a time limit and stick to it. With casual droppers-in remain standing. Arrange to meet in the other person's office if it is nearby. Avoid small talk when you are busy. Get them to the point; don't be afraid to interrupt the interrupter, asking them - "What is the problem? What is the purpose of the call?"

Nine out of ten men shave daily. Today, as in more primitive times, men devote more time to shaving than any other area of personal care. It is estimated that modern man spends 3,350 hours (that is 19 weeks) of his life standing in front of a mirror, scraping a layer of skin off his face, together with the growth of the previous day. Between the ages 20 and 50 you will spend an estimated 8,000 hours eating — the equivalent of 330 days and nights.

Self-development is a journey not a destination. You don't just get there and leave it at that — which is why your smart objectives need to be SMARTER: Specific, Measurable, Agreed, Realistic, Time-bound, Evaluated, and Reviewed.

Time comes in different guises. Basically, at work there is discretionary time — the time which you can choose to spend as you will — and committed time. Committed time is time that is booked for one reason or another. However, if you are alert you may find portions of it which are actually free time.

Waiting in a bus queue is a good example, you are committed to be standing there, but you need not waste the time. A day has a hundred pockets of time if you know where to look for them.

Time — human time — is the most precious natural resource you have. Time is well-managed if — things that ought to run smoothly are doing so; desired ends are being achieved by the economical use of time.

Remember, time is a depleting resource.

Scary variances

FOR many students, variance analysis is a nightmarish topic, what with all types of computations involved. "Variance analysis is an essential for effective management control," write E. Harris and C. West in Variance Analysis of CIMA Publishing. A sampler:

Standard hour is the amount of work achievable, at standard efficiency levels, in an hour. It is similar to the standard quantity of materials. It is not unusual to talk of a `three-hour journey' by car or train, even though traffic or weather conditions may make the journey shorter or longer than expected. The decorating of a room could be described as a `two-day job'. It is a useful concept to describe the quantity of work to be achieved.

If fixed and variable production overheads are absorbed on the basis of a rate per unit, rather than a rate per hour, then there is no concept of standard hours for overheads and therefore there can be no efficiency variance.

Where substitutions within the mix of materials input to a process are possible, the mix variance measures the cost of any variation from the standard mix. The variance, for each input, is based on the change in its weighting within the overall mix, and whether its unit standard cost is greater or less than the standard weighted average cost of all material inputs.

If a firm sells a variety of different products, each with a different profit margin, the sales volume variance can be analysed into a sales-mix variance and a sales quantity variance. These can be calculated either on the basis of the profit per unit, using absorption costing principles, or on the basis of the contribution per unit, using marginal costing principles.

Generally, variance analysis does not provide the answers but helps to pinpoint the areas where investigation is necessary and where questions should be asked.

In studies, one main variance to be analysed is the marks variance — that is, the difference between expected and actual marks.

Spend money wisely

INVESTMENT appraisal is concerned with spending money wisely, state the authors C. West and N. Stein in Investment Appraisal.

The book has chapters on calculating present value, NPV, IRR, payback, ARR, inflation, sensitivity, capital rationing and so on. A few picks:

Sensitivity analysis is a modelling and risk-assessment procedure in which changes are made to significant variables in order to determine the effect of these changes on the planned outcome. Particular attention is thereafter paid to variables identified as being of special significance.

Taxation payments are cash outflows, just as wages, material purchases and so on. Taxation effects which need to be reflected in investment appraisal are: capital allowances, corporation tax on inflows, government grants and discounting rate post-tax.

The real rate of interest in terms of the time value of money looks at purchasing power, whereas the money rate of interest looks at time value of money in cash terms. It is important that we use the correct discount rate, that is, the real rate should be used only where real cash flows are given (where inflation has already been taken out). The money rate should be used only when cash flows including inflation are given.

Accounting rate of return is a non-discounting method of appraisal which springs the use of return on capital employed (ROCE) as the `prime ratio' in financial analysis. The usual method of calculation is to express average annual pre-tax profit as a percentage of the average `capital employed', that is, the original investment.

Normally, projects with unequal lives can be ranked by the size of their net present values or profitability indices. However, if there is to be a choice between two machines which do identical jobs, but have unequal lives, then there is a useful technique which can be applied to the NPV.

This is the annual equivalent cost or value (AEV), and is calculated by dividing the NPV by the appropriate cumulative discount factor for the number of years involved. The principle is that the AEV is the constant annual PV, which, if multiplied by the number of years, produces the same NPV as the actual flows.

Invest in appraisal before investing in projects.

(Books courtesy: Viva Books P Ltd viva@mantraonline.com)

Tailpiece

"Satyameva Jayate."

"How inspiring!"

"But, my question is `when'."

ReadingRoom@TheHindu.co.in

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