How healthy are your project finances?
From the The Money Files Blog
by Elizabeth Harrin
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.
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How healthy are your project finances?
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Date
OK, we’re part way through the year and the reforecasting is already upon us! Unless your budgets have been managed to the penny and everything is on track, chances are you are probably facing some reforecasting for the remainder of the year.
In my experience, many project managers are accountable for budgets but lack confidence in financial health – it’s one of the things I talk to project managers about in my mentoring calls a lot. But the thing is that financial problems rarely appear suddenly. They creep in quietly, in a little overspend here or there, or a supplier delay that doesn’t feel like a lot until it’s pushed your spend into next month and you’re dealing with accruals.
So April is an ideal moment for a quick, painless financial
health
check before issues harden into forecasts.
What do we mean by financial health?
I mean not the easy question of “Are we on budget?” but the rounded questions about
- How predictable is our spend?
- How confident are we in the forecasts?
- How aligned are we between cost, scope, and progress
Because a project can be on
budget and still financially unhealthy. So you need to look at it in the round.
What to look for
You’re looking for:
- Actuals consistently lagging or jumping month to month, especially if you find they aren’t submitted in time so they are regularly pushed into next month to show up in the accounts.
- Forecasts being reworked without clear reasons (not pointing the finger at any particular team…)
- Commitments not reflected in the cost report, although this depends on how you manage your accounting for projects – what you do want to do is share visibility of upcoming costs
- Heavy reliance on contingency, because that’s what it’s there for, right?!
In my mind, the worst is when the sponsor is surprised by numbers that the project manager thought were understood. Because that’s a massive disconnect between what you thought you were managing to and what they think is going to happen.
However, these are not mistakes, they are signals that help you understand what to tweak to get the project finances back under control.
How to get started
It’s not that difficult, as long as you put some time aside to work through what your project finances currently look like.
For example:
- Reconcile actuals vs planned spend and check everything is as you expect
- Sense-check remaining work vs remaining budget and reassure yourself that there is enough money to keep the project afloat until the end!
- Review assumptions behind the forecast and validate them (and ask for more money if necessary, if they turn out not to be true)
- Check alignment between schedule milestones and cost profile, and link in with the finance team to check on the cash flow implications
- Confirm who actually owns financial decisions, because it probably isn’t you when all is said and done. And it’s really helpful to know who you have to pitch recommendations to.
Finances on projects is not just about reporting. It’s also about control, and the reports are one thing and yes we need them, but the data in the reports is how you make better choices about how to run the project.
Don’t leave financial conversations too late. That’s putting off conflict or challenge because numbers feel uncomfortable, and I promise you can get better at project financial management, even if you were rubbish at Maths at school.
Financial control is part of professional project leadership, and there are experts in your organisation with letters after their name who can help. You simply have to ask the right questions and have an idea of what you want to be seeing. And if you don’t see that, you’ll need a few ideas about how you could influence the numbers to bring them more in line with everyone’s expectations.
Small, regular checks prevent uncomfortable conversations later, and are far easier to manage than the change control process where you have to go back asking for more money close to the end. The most important thing is that your numbers are trusted, so start from there, getting accurate data and then see what it’s telling you.
Posted on: April 23, 2026 10:00 AM |
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Comments (2)
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Sujit Supekar
Project Manager | PMP | Agile | Payment | Product Development| WorldLine
Mh, India
From my perspective, this is one of the most underestimated responsibilities of a Project Manager. Many projects appear “green” from a schedule perspective while silently becoming financially unhealthy. A project being “within budget” does not always mean it is financially controlled. The real indicators are forecast accuracy, predictability of spend, alignment between scope-progress-cost, and transparency with sponsors.
Your article correctly emphasizes that financial management is not just reporting—it is decision-making. A mature Project Manager should continuously perform financial health checks, reconcile actuals vs forecasts, validate remaining budget against remaining work, and proactively communicate risks before leadership discovers surprises.
I strongly believe project financial discipline is a leadership capability, not merely a finance activity.
SANTOSH BADGUJAR
CHIEF OPERATING OFFICER| Accumax Lab Devices
Ahmedabad, Gujarat, India
Project financial health is one of the leading early warning indicators of project delivery risk. In manufacturing, we track budget burn rate alongside schedule performance weekly — because cost overruns in regulated environments often signal scope creep or change control failures. Many PMs know how to create a budget but fewer genuinely understand how to read financial signals as risk indicators. This diagnostic framework is excellent — every PM should run this check at least monthly.
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