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The Standard for Program Management, Fourth Edition (2017) defines Program Financial Management like this:
Activities related to identifying the program’s financial sources and resources, integrating the budgets of the program components, developing the overall budget for the program, and controlling costs during the program.
As you can see, there’s a lot more to crunching the numbers for program finances than simply having a single budget spreadsheet!
Let’s look into that definition a bit more and I’ll give some examples from my work as a programme manager (as we would spell programme in the UK).
Identifying financial sources
This means finding out where the money is coming from. In a large program, you might have a single source of funding, or several. Research projects, for example, might have grant income, so within the program you might have several funding sources.
On the large healthcare program I led, the Finance team created a brand new cost centre for the work so everything could be tracked in one place. Funding was centrally agreed and moved into that cost centre.
Identifying resources
This sounds easy, but in practice a large part of my role as a program manager was finding the right people to do the work and then helping them find the time to actually do their tasks! Admittedly, it’s a lot easier if your program has dedicated resources.
For some of my work, we’ve been able to budget for backfilled resources so we could bring people out of their day job and second them to projects. Then the project could pay for someone to cover their job while they dedicated their expertise to the work.
Integrating budgets of program components
Programs are made up of several (sometimes many) different projects and often a BAU component too. As a result, the program manager has to juggle the budgets and create a master, summary budget.
There’s work to be done here in making sure the whole thing is put together holistically and with the least repetition possible. For example, if you are securing a legal expert to support on one project, it makes sense that they are also kept on to help with another project as they will have gained some awareness of the program overall and the company. If the timelines can be made to work, or you can pitch a larger engagement for the legal consultant, you may be able to secure their time to get consistent resource (and maybe even a cheaper price for a longer engagement).
Developing the overall budget
When all the program components are effectively budgeted and you can bring the whole thing together, the program manager can create an overall budget and a way of tracking against that.
Controlling costs
Controlling costs is part of project, program and portfolio management, so it’s definitely up there as an important activity for program managers!
Luckily for me, my program costs were so large that I had the support of the Finance team – I think the company wanted the extra governance and accountability for having accountants pour over the details. Project budgets and costs were centrally managed and controlled in our cost centre. Tracking became a job of getting the data and consolidating it. Controlling costs became an issue of making sure change requests were done in an appropriate way and ensuring there was enough oversight of where we were spending the money.
We did not use EVM to track and monitor costs, but this might be part of your program management environment. If that is the case, you’ll probably have software to help you track and monitor costs and also to support with the reporting.
Summary
Program financial management might seem a daunting task but it’s very similar to managing your project budget. The numbers can be a lot bigger, but the maths is the same principles. What’s your experience of program financial management? I imagine it looks very different for every program as there are plenty of ways of setting up programs, and many variations on what financial management is necessary and appropriate.
Posted on: March 15, 2022 04:00 AM |
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