Factors affecting Navy Working Capital Fund (NWCF) net operating result: a case study of Naval Facilities Engineering Command Washington, Washington D.C.

Abstract

Over the past four years, Naval Facilities Engineering Command (NAVFAC) Washington has encountered net operating result (NOR) losses not anticipated in the Navy Working Capital Fund (NWCF) budget. These unanticipated losses primarily stemmed from three major factors associated with financial operations. The first factor is the creation of stabilized rates that turned out to be insufficient during fiscal years 2006, 2007 and 2008. The second factor is the disparity between the budgeted and actual average labor hours worked. The third factor is the continued rising cost of purchased utility commodities in support of the services rendered to the customers, coupled with the inadequate revenues generated from utilities services performed. This MBA research project uses the labor and budget information provided by the command to assist them: (1) determining the financial impacts due to inaccurate projected labor hours, (2) evaluating the current policy concerning stabilized rates, (3) mitigating the impact associated with the rising cost of purchased utilities, and (4) developing an improved model for estimating future expenses and revenues.