Project Financial Management – 10 Key Actions to Streamline Your Business
Over the past decade or so we have been continuously bombarded with news about private and public projects that have either delivered scope at properly over the expected spending budget or had to lessen scope to even come near to the original spending budget. Current thinking within project management methodologies only discuss the monetary aspects of a project at a high level, leaving the "student" without any real way of working to greater recognize the impact of their decisions on the monetary results of the programme. In turn, the business case development is commonly given minimal time and can be a rushed job in the end. Investing in the correct people today and time up front to review feasibility and secondly the business case is often a ought to to ensure the total on target delivery of a project.
Within the financial climate we are in, where budgets and costs are being cut, the time is now to ensure that whatever funding a firm has available, that they invest it wisely - to do that you simply need to ensure that the project in the end - budget, costs and benefits are comprehensively reviewed.
With this in mind - using the Pathfinder Project Management Methodology as a basis, below are the 10 key actions to successful project financial management
(1) On new projects - invest time generating accurate feasibility studies and business instances, if this is a rushed job - in the end the results will deliver overspends.
(2) Review your project portfolio - are you carrying out the right projects, are they nice to haves, are they being done for internal political gain - ensure every single business case is robust and adds value to the future of the firm - spend time making use of prior experienced people to review and re-review the business case.
(3) Concentrate reviews just as hard on the rewards as the price. In 80% of projects, once they are in, nobody wants to go back and review if they delivered as promised. So make sure from the begin of the project you continuously check that as well as costs being on spending budget, that adjustments to your project have not altered your rewards.
(4) Cost cutting is just not often the answer - allocate resource to "added value" projects - in today's world cutting heads is a an simple short term fix, don't throw out the baby with the bath water and leave the firm with projects in-flight with no experience to deliver them. Instead review your project spend and as in (2) concentrate on adding value.
(5) Workforce development - up-skill their monetary management understanding, develop staff in leadership, well being and safety, motivation etc - so when you put a non-finance manager in charge of a huge project, is it not about time they were given the financial know-how. Don't leave monetary management to opportunity - develop your workforce.
(6) Break down the project into financially manageable sections. Too a lot of projects work on the basis of a "pot of cash" - spend it as per the budget and if luck is with them, excellent! Instead take the "pot" and break it down into manageable sections - mapped to your project structure, that way you are able to see where budgets are by "workstream" and what ones are over/underspending.
(7) "one point of contact accounting" - too many managers will lead to spending budget overspend - following on from (6) above - The overall programme manager is responsible for the budget in total, at the same time every head of the projects parts should then be responsible for managing their component of the spending budget. This leads to one finance manager dealing with one project manager, ensuring a consistent relationship.
(8) Deliver focused and meaningful financial reporting to enable accurate decision-making. Additional is less - agree on what reporting is needed from the project at the start and continuously enhance until it is what the project needs to manage the programme of work. Mainly because an accountant can deliver 20 pages of analysis a month to every project manager it does not mean that it's correct - save the trees - minimise the reporting and strengthen the decision producing.
(9) Communication - have a strong relationship between your project and finance manager. Finance can't be back office, they require to be aspect of the project team and be observed to be so, and therefore open and honest communication channels lead to no surprises.
(10) Finance really should be produced aware of all potential risks / problems as well as a probable price - if a issue has or may well arise warn finance early, finance will be limited to what they can do to assist "after the event".