Project Finance: The Project Manager's Role
Can projects be classified as successful if they fail to meet the financial goals they had signed up for when they were initiated? By their nature, project results are tightly coupled with project costs--and any escalation to these costs at any phase of the project can be considered a failure. However, in many cases the perceived long-term value of the product produced by the project could keep financial underperformance conveniently out of the stakeholder radar.
Gartner has indicated that 70 percent of projects had failed to satisfy the project cost and quality goals--and 50 percent of projects are delivered over budget. These could very well be the reason why 52 percent of projects are cancelled (according to the CHAOS Research Group).
Each organization follows a very specific financial management process for their projects. Most of the guidelines would usually originate from the finance department of these organizations and get handed over to the Enterprise Project Management Office (EPMO) or the Corporate Project Office. Financial accounting, compliance and variance reporting usually are the major components in the guidelines recommended or mandated by these corporate financial entities.
The EPMO usually has the option to incorporate the accounting codes laid down by the corporate finance entirely or to comply with these recommendations using its own project
Please login or register below to read the rest of the article.