The Money Files

A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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3 Ways To Keep Your Project on Budget

5 Levels of Project Financial Management Maturity [Infographic]

How To Secure Continued Funding For Your Project

5 Differences Between Project Accounting and Financial Accounting

5 Contract Terms You Should Know [Video]

4 Reasons Why People Need Estimates

4 Reasons Why People Need Estimates

Estimating take up far too much time and are, as my 3-year old says about everything right now, ‘a bit boring’. I have no idea where he picked that up from. Don’t judge me!

I digress. We need to do estimates. And if you are one of those strange people who LOVE doing estimates, then skip this article and go and read this one instead!

Take a deep breath, and think for a moment about why we bother to do estimates. In his book, Project Management for Humans, which is soon to be released, Brett Harned provides 4 reasons why estimates are important for people on the team.

1. Estimates help you cost the project

“Estimates are based on a level of effort and times,” Brett writes. “Typically, the cost of a project is based on the time spent on a project. Your estimate helps calculate a rough determination of that cost and sometimes whether or not the project is worth the investment.”

A giant estimate normally comes with a giant price tag, and that might mean you don’t go ahead with the project. Or you scale down the scope significantly so you still get some benefit and don’t have to spend half your annual budget on this one project.

Either way, knowing how long things are going to take gives you valuable information to make informed decisions about your project and whether or not it should go ahead in the current form.

2. Estimates help you staff the project

Estimates are created around specific tasks and the skills required to complete those tasks.

Your estimate therefore gives you clues about who you need to do the work. And in turn, that gives you a good idea about how long the work will take.

For example, a senior developer might take a week to complete a task, but your apprentice developer would take a month, and need someone else working alongside them to help check the work and support them during the coding. Knowing this you can then decide what’s more important: having the work done quickly or upskilling the apprentice. Or maybe you won’t have a choice, if the skilled developer is working on something else and isn’t available.

Either way, estimating the work and thinking of who is involved in doing it will give you invaluable information for your plan.

3. Estimates help you plan dependencies

If you know how long a task will take you can better plan for the impact it is going to have on other tasks or on other projects. The duration of a task can help you schedule the next set of tasks, or tell another project manager when they’ll be able to start work on their project (or task).

For example, if you are tying up your senior developer for 4 weeks, in a business that only has one developer with those skills, the next project to use that person will have to wait until they are free. That’s a dependency on that skilled person.

You have a number of options to deal with that dependency including changing the project priorities so the other project gets the resource before you if that project is ‘more important’, buying in external skilled resource if you want to do both at the same time, or even having someone else with less ability work on it so you can at least make a start. But you need to know that you have a problem with resourcing and dependencies before you can start to come up with solutions to address it.

Here’s an introduction to dependencies and constraints on projects. Even knowing that your project doesn’t have dependencies on any other work is a big help with your planning because it frees you up to get on with things safe in the knowledge that your team isn’t messing anything up for anyone else. (Of course, that might change if a new project is approved – so don’t take it for granted.)

4. Estimating creates agreement and buy in

“Working with a team can often be a challenge, particularly when no one is in agreement on the project,” Brett writes. “Working together to produce an estimate can be a great way to pull the team together to talk about staffing, responsibilities, process, and timing. And guess what, that all helps produce a solid estimate.”

I covered this in my book too, Shortcuts to Success: Project Management in the Real World. I highly recommend that you share all your budget information with your team, from the moment you start to work on estimates through to the budget spreadsheet and forecast rates.

Working together will help you gain collective responsibility for the dates and scope of the work. You can hold each other accountable and no one can turn around and say that they weren’t aware of the deadlines or their responsibilities. That’s huge, especially on projects with tight deadlines and remote teams.

So, estimates benefit you and your team in lots of ways, and they are a part of your project to just get on with, get done and then start using. They can feel like the start of the real detailed work, the prelude to the fun part of building, but they help set you up for success and a smooth delivery. What do you feel about estimates? Let us know in the comments below!

Posted on: June 21, 2017 09:59 AM | Permalink | Comments (6)

Ask The Expert: Lauren Maffeo

Categories: cost management

Lauren MatteoIt’s been a while since we’ve had an Ask The Expert column so I figured it was about time I reached out to some people and brought you some insights from others! I caught up with Lauren Maffeo, project management researcher at GetApp, recently and here’s what she had to say.

Lauren, what are the most surprising things you've uncovered in your recent research?

When I conducted research on the project management software market last year, I expected project managers to cite a diverse range of software that they use to manage projects. Instead, two in three respondents said that they use Microsoft Project (you can read more about that result here), despite the fact that three in four respondents worked in a small business.

I was also surprised that almost three in four project managers use between two and five total tools for project management - and five percent use more than 10 tools! These numbers suggest that today's most popular project management software tools support built-in workflows that don't match how today's project managers work.

Yes, I can totally see that from my own experience! Has any of your research uncovered areas where decision makers in project management could cut that down? It must be expensive to maintain so many tools.

The best way for project management leaders to save money and improve efficiency is to shop for project management software that integrates with the tools their project teams already use.

For example, let's say your cross-functional project team uses Salesforce for customer relationship management (CRM) and MailChimp for email marketing. If your project management software doesn't integrate with Salesforce and MailChimp, then you're paying for three separate tools and keeping project data in three separate locations. By contrast, if you switch to project management software that integrates with Salesforce and MailChimp, then all project team members can view project details within the same software and keep using the specialty tools of their choice.

Great tip, thank you. What other tips do you have for project managers wanting to make decisions about their tools? Where should they start?

Project managers should start by confirming how many tools they're currently using for project management. This can be everything from software to Google Sheets to Post-it notes. Then, they should shop for project management software that integrates with as many cloud-based products in their toolkit as possible.

They should also prioritize project management software with strong task management and collaboration features. Finally, project managers should shop for multi-tiered software that can scale as their project teams and business needs grow.

What do you think project managers should be aware of going into the remainder of this year?

Project managers should be aware of how crucial it is to prioritize "soft skills". Gartner research shows that the traditional PPM role won't exist by 2020. This is largely because the nature of IT projects is changing as businesses shift to digital. Since business leaders will be pressured to innovate more quickly, Agile project management will grow in value. So, project managers who can successfully lead project teams and persuade stakeholders will have more influence than ever before.

Wow, interesting. So tell us, what's the best thing about your job?

The best thing about my job is learning and sharing how technologies that seem abstract today (like blockchain) are already improving peoples' lives. It's also exciting to see the project management discipline gain so much respect. Not long ago, project management was largely limited to IT departments in large enterprises. Today, teams across industries from healthcare to digital media practice project management methods that range from Agile to Kanban. Project managers who can merge technical knowledge with strong soft skills are not just poised to lead successful projects - they have the chance to lead business strategy.

Thanks, Lauren!

About Lauren: Lauren Maffeo covers trends in the project management, finance, and accounting software industries for GetApp, a Gartner company. She focuses her research on strategies and tools to help small and midsize businesses create unique value. Lauren previously covered technology trends for The Guardian and The Next Web

Posted on: May 15, 2017 08:00 AM | Permalink | Comments (7)

4 Tools for Project Cost Control (and where to use them in the project life cycle) - Video

Categories: cost management, video

Posted on: February 17, 2017 12:59 PM | Permalink | Comments (3)

5 Costs That Could Cost Your Project [Video]

Categories: cost management, video

In this video I look at 5 costs that you might not immediately think of but that could have a drastic impact on the profitability of your project.


Posted on: December 11, 2016 11:59 PM | Permalink | Comments (2)

Project Finances in the Execution Stage [Video]

Categories: cost management, video


Here’s a summary of what’s covered in the video.

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:

  1. How many days have you already worked on the task?
  2. 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.

Posted on: March 15, 2016 11:59 PM | Permalink | Comments (3)

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