The Planning performance domain in PMBOK 7 covers all things relevant to making sure the project is adequately planned. We want to address all the work required to deliver whatever the project is delivering, and to do so in an organised, thought-through way.
Planning for the financial aspects of your project is covered by this domain.
Budgeting
Budgeting is the obvious one: as part of putting together the early steps of getting our project off the ground, we need an idea of how much it is going to cost. That means taking info from the task and work estimates and using that to create a cost estimate.
Building out the cost baseline forms part of the project planning activity and then it’s used to track against. Project performance can be measured against the baseline, in the same way you do for tracking schedule activities. In fact, combine cost and time schedules help you phase the spending. Even if you don’t go ‘full EVM’, a phased budget is helpful for the finance team to manage cash flow and for the project team to track whether work is broadly happening at the expected pace.
Financial management
Knowing how you are going to manage the finances is also useful and worth working out at this point. For example, how often are costs going to be reviewed? What contingency reserves are going to be put aside and how will the team access those? What’s the process for getting purchase orders raised and invoices approved for payment? Do you have access to a management reserve and if so, who is going to approve using that funding?
Procurement planning
Most of my projects involve buying things from suppliers. Whether it’s something small or a multi-million pound deal, procurement activities are a big part of what we do.
It’s important to spend time in the project planning phase thinking through how procurements will be managed. Will you have a dedicated procurement professional to manage the contracts and run point with suppliers? Who is going to manage supplier relationships? What’s the process from choosing a supplier and negotiating a price to actually getting the contract signed off and the order raised? I know from personal experience that this process is easier said than done!
If you have someone managing the contracts on your projects, they will need to know what the project needs to buy, when the team needs it for, what the lead times are likely to be and a lot more. Given that at the moment the lead times on all kinds of equipment and building materials seems to be extending – our own build project at home has been delayed – and the price of materials is rising – it’s really important to be all over the numbers, process and plan for this aspect of your project.
There’s more to the Planning domain than simply thinking about the money and contractor relationships, but these aspects are essential if your project involves procurement work. It’s all too easy to get sucked into scope discussions and deadlines and milestones – because executives want to know when the project will get delivered, not who in Finance is going to be processing the requisitions.
So this is just your friendly reminder to make sure you allow adequate time in the planning stages of your project to factor in the finance planning – and that it’s an ongoing activity for each stage, and as your project evolves.
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