Project Management

Why you should care about your project finances

From the The Money Files Blog
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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 GirlsGuideToPM.com.

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I’ve been asked a couple of times now about why understanding your project’s finances is important. If your company doesn’t ask you to track your hours or what is being spent on the project, why should you care about the numbers? Your role is to deliver the project according to the scope and quality criteria set but the sponsor, right?

Wrong.

Your role is to deliver a project that is fit for purpose and adds some value to the organisation. Whatever you are working on should have a benefit. As we saw last week, benefits don’t have to be financial. But there should be a purpose to what you are doing – someone who cares about the outcome enough to sponsor the project, and a business case that justifies why you and your organisation are bothering to work on this project at all. And that requires you to know a little about the finances of the project.

You don’t have to do sums. You don’t need to have complicated spreadsheets or do lots of financial reporting. All you need to do is work out roughly whether the effort you are spending on this is worth the perceived benefit. Use your judgement. If the sponsor is asking you to work on a project that will take eight months of your time to complete, with no other costs, but it will deliver pretty much no benefit, is it really worth it?

This is such an important question right now as project teams are pared back to the bear minimum to reduce costs. Ideally, the programme office should have done this thinking for you, and be giving you the confidence that you are working on something important and of business value. But in the absence of someone doing that, you need to. And frankly, even if they are doing it, you should sanity check it yourself.

Put your project in the overall context of the organisation’s operating environment. With whatever ‘efficiency measures’ your company is implementing, is this project a good use of your time or could your time be better spent working on something else?

You know the hair care advert: ‘Because we’re worth it.’ Well, project managers need to work out if their projects are worth it. Are yours? Which projects will you recommend closing when your sponsor is back from holiday?

Posted on: August 27, 2010 04:19 PM | Permalink

Comments (2)

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some people say project manager should only work to deliver what is on scope.


Delivering to budget is also - in my opinion - part of the project manager's brief. If you deliver the scope but at a price 30 times higher than the sponsor agreed, did you really do a good job? I believe project managers should be financially aware.

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