A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
During project execution you are putting your plan into action. Part of the monitoring and controlling of your project is to make sure that you understand how much work has been carried out so that you can work out the costs.
It boils down to two questions:
How many days have you already worked on the task?
How many days have you got left?
Armed with the answers to those questions you can calculate the additional cost, if any of completing the work.
During execution you may also be using earned value calculations, which are beyond the scope of this video today, but definitely worth a look if your sponsor wants a really detailed understanding of project performance.
As well as monitoring cost performance you can also monitor and control your risk response budget, review your quality efforts and costs and check that your resource planning is still accurate and you’re on track to deliver for the budget you set.
You’re likely to have to do some kind of course correction as it is a rare project that moves ahead perfectly to plan. This will involve handling change so you’ll be drawing on a change, contingency or management reserve budget or moving numbers around so that you can deal with the costs of change.
The biggest challenge during the execution stage is communication, and the authors of Project Management Accounting talk about that a fair bit. Without good communication you won’t have an accurate picture of project performance and you won’t be able to track and monitor any aspect of your project, let alone the budget.
You also have to work out what is the right level of detail to be sharing about your numbers – while you need all the detail your managers might not want that. If you don’t have a standard project management reporting template then you’ll have to make one up and getting the level of detail right could be trial and error as it depends so much on what your audience is interested in.
Tracking project financials is a really important part of the execution stage because it’s how many projects are judged – cost control is essential. Make sure you are spending enough time on it, and know enough about how to do it, to keep your project financials under control.
