The Money Files

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

About this Blog

RSS

Recent Posts

How to Manage When Your Project Budget is Cut [video]

What's New in Project Cost Management (pt 4)

What’s New in Project Cost Management (pt 3)

What’s New in Project Cost Management (pt 2)

What’s New in Project Cost Management (pt 1)

How to Manage When Your Project Budget is Cut [video]

Categories: budget

This short video gives you some tips on how to manage the situation when your project funding is reduced. For more detail on what you should do if your project budget is cut, check out this article.

Posted on: February 13, 2018 08:59 AM | Permalink | Comments (8)

What's New in Project Cost Management (pt 4)

Categories: budget, cost management

What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.

What’s new in Project Cost Management: Estimate Costs Process – read the second part of this series here.

What’s new in Project Cost Management: Determine Budget Process – read the third part of this series here.

In the last article I looked at what was different about the Determine Budget process in the new PMBOK Guide®-- Sixth Edition. In general, what I’m feeling about the whole knowledge area is that Project Cost Management has been simplified and streamlined, rather than given a total overhaul.  Today, I want to look at what’s different in the next process: Control Costs.

Control Costs Process

The fourth process in this knowledge area is Control Costs, and it has been given a spruce up to bring it in line with other processes. However, while it might look different in places, I’m yet to uncover anything radical about how you should approach managing costs on your project.

We have moved into the monitoring and controlling process group.

Inputs

There were 4 inputs and now there are 5.

The new one is project documents. The lessons learned register specifically gets a mention. I think this reflects an overall understanding in the PMBOK Guide® -- Sixth Edition, that actually we do need to continue to look at what’s working and what’s not throughout the life of the project, not just at the end. I wrote a whole book about this topic, so I’m delighted that it’s finally making it into the mainstream. And, of course, it’s a lot more agile in thinking, than the old way of managing project lesson learned meetings.

Tools and Techniques

The number one T&T from the previous edition was Earned Value Management: now it is Expert Judgment.

I doubt many people will be losing sleep over that!

However, Earned Value is still in there, under the heading of data analysis. Other data analysis techniques that get a mention include:

  • Variance analysis (this is schedule variance, cost variance and performance indices)
  • Trend analysis (this is your EVM charts and the forecasting you do to show estimate at completion)
  • Reserve analysis.

There does seem to be an overlap with expert judgment here, because the expert judgment examples also include earned value analysis, forecasting and variance analysis. You do need to apply expert judgment to use these techniques, so perhaps that’s why. It reads as a duplication though which I think is confusing.

The project management information system gets a mention as a new T&T, only because project management software has dropped off. PMIS is a more inclusive term, I think, and it makes more sense to use this throughout as it can refer to lots of different types of systems that you can use in your day to day work. PM Software just makes me think of scheduling tools.

Outputs

Organisational process asset updates have dropped off the outputs. There aren’t any new ones so it means that at the end of this process you end up with:

  • Work performance information
  • Cost forecasts (because you are amending these as you go as you control the costs)
  • Change requests (again, as a result of tweaking, monitoring and controlling the costs)
  • Project management plan updates
  • And you update documents (can you see a trend here?)

That’s the last of Project Cost Management process. Overall, I think that the updates have been kind to this knowledge area. The changes have made it a lot easier to adapt the process to your environment because instead of mandating particular inputs or tools, you have the flexibility to use what you need now.

In real life, you’ve always had the ability to use what you need, but the updated standard has given less confident project managers the ‘permission’ to flex their approach as required.

The downside of a more flexible, tailorable approach is that the project manager needs to apply more professional judgment to know what’s acceptable and what is going to work. That’s hard to do if you don’t have much experience. It will be interesting to see how the changes affect people day to day, if they do at all.

What do you think?

Posted on: February 08, 2018 08:00 AM | Permalink | Comments (6)

What’s New in Project Cost Management (pt 3)

Categories: budget, cost management

What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.

What’s new in Project Cost Management: Estimate Costs Process – read the second part of this series here.

In the last article I looked at what was different about the Estimate Costs process in the new PMBOK Guide®-- Sixth Edition. Overall, I’m finding that the process is more streamlined and easier to tailor because there is more scope to adapt – mainly because the inputs and tools and techniques feel more inclusive. Today, I want to look at what’s different in the next process: Determine Budget.

Determine Budget Process

The third process in this knowledge area is Determine Budget, and while it looks quite different, it’s really just a tidy up and alignment to what’s been happening elsewhere in the standard.

We are still in the planning process group.

Inputs

There were 9 inputs: 7 of them have been thrown out.

This sounds a lot more radical than it actually is. All that’s really happened is that the project management plan and project documents cover a chunk of the paperwork that included files specifically called out by name in the previous version, like the cost estimates created in the previous process.

That’s meant the inputs have dropped down to 6. There is one surprising one: Enterprise Environmental Factors. How was that not in there before? It’s one of those inputs that you get tired of hearing about because it crops up everywhere! Now it’s in this process as well, and exchange rates get a specific mention because of how they can influence your budget.

‘Business documents’ is the other new one worth a mention, and this refers to the business case and benefits management plan. I like how these are considered ‘business’ documents as in they are owned by the business and not the project team. However, the project team are going to have some input into them, I am sure.

Tools and Techniques

Tools and Techniques isn’t that different. Data analysis has been added in, as a catch-all term that includes reserve analysis, if your project is going to get a management reserve.

There’s another new one too: Financing. This is about getting the funding for your project. I’m not sure why this is a technique, when it feels quite process-y to me. It’s all about securing external funds if that’s appropriate for your project, so would include everything covered in the book about writing proposals that I read over the summer.

Read next: How to secure continued funding for your project

Outputs

Nothing has changed in the outputs. You still end up with the same at the end of this process:

  • A cost baseline
  • The project funding requirements
  • And you update documents (there’s a lot of that in project management!)

Next time I’ll look at what’s new in the Control Costs process. There are tweaks to this process (including to the outputs) but I hope you’ll agree that they are all sensible changes that do make the process easier to understand and follow.

Posted on: January 29, 2018 08:00 AM | Permalink | Comments (10)

Why You Don’t Need Money to Have a Successful Project

Categories: budget, success factors

This month it’s all about celebrating project success here on ProjectManagement.com, and with that in mind I wanted to explore some ideas around what makes a project successful.

Malcolm Gladwell has been instrumental in shaping my thinking about this, and you can read more of how I got to know of his work and his thoughts on the paradox of successful cultures in this article.

Often times, we rely on the old adage: “Fast, good, cheap: pick any two.”

The assumption here is that if you don’t pick ‘cheap’ and you have plenty of money to invest in your project, then you’ll get a successful outcome. We also hear leaders talk of being able to throw money at a problem.

Don’t get me wrong. Having money to help resolve issues and to fight off potential problems is a huge benefit. Funding does make many issues seem less troublesome. When you can call in extra resources or buy more stock without worrying about it, that’s definitely a burden removed.

The thinking of Gladwell, author of Blink and Outliers, suggests that successful cultures aren’t the ones with the most money to throw at problems. Success doesn’t come from unlimited funding.

Borrow and Follow

Successful project cultures are those that rely on the ‘borrow and follow’ approach that Gladwell laid out at the PMI Global Congress North America in Dallas where I heard him speak.

Those project management cultures don’t innovate – at least, not extensively. They look at what is working and adapt processes to their own environment. They actively pay attention to lessons learned. They work hard to build organisational knowledge and avoid the mistakes of the past – following in the footsteps of those who have done good work.

In other words, don’t reinvent the wheel if you don’t have to. Let someone else do the heavy lifting. In project management this could look like:

  • Using a standard, published, recognised body of knowledge instead of trying to write your own
  • Using best practice processes, instead of trying to design your own
  • Having a robust and followed lessons learned process so that continuous improvement becomes part of the fabric of the way things are done (whether that’s using Agile approaches or continuous review during a sequential-style deliver)
  • Using existing published career paths and competency models for your project managers instead of trying to write your own
  • Using existing, recognised training and credentials for your project managers and team members instead of trying to design in-house training schemes.

There’s no requirement for ‘success’ to start with a lot of hard work in setting up systems that already exist elsewhere. While you should always be mindful of taking intellectual property and reusing it as your own (ethics is always paramount), there are plenty of materials, processes, templates and more out there that mean you can create a successful project management culture with a smaller initial outlay.

The Negative Side of Funding

The other interesting idea that has come through Gladwell’s thinking is the concept of money constraining creativity.

In other words, the more money you have, the less creative your project environment is likely to be, and that can have implications for success – both on a project level and on a portfolio or PMO level.

You’ve probably seen this yourself in your workplace. When money isn’t an issue on a project (if you’ve been lucky enough to be in that kind of environment) then you’ll know that when you hit a problem, the first thing the team thinks about is how to buy their way out of it.

When I researched my first book, Project Management in the Real World, I included a case study of a build project where the team had to work creatively together to find ways to hit the project budget. The project was a success because the effort of having to think creatively around funding brought the team together. The closer working relationships they forged when together the various suppliers worked with the project’s objectives front of mind made it a better project for everyone.

Money Doesn’t Equal Success

I don’t doubt that money makes projects more likely to hit their objectives. The experience of working on a project with adequate funding is more pleasant than having to scrabble for resources, count every penny, and challenge every receipt. But it isn’t the only thing that makes a project successful.

Think about your projects and what success looks like for you. How much of it is determined by the funding available and how much by the talent of the team, the timescales or the commitment of leadership?

What do you think about this topic? I’d love to hear your thoughts so let me know in the comments below.

Posted on: December 13, 2017 07:59 AM | Permalink | Comments (9)

3 Ways To Keep Your Project on Budget

Categories: budget

Here’s a short video sharing three ways to keep your project on budget, but be warned, these are suggestions for project managers willing to take the difficult decisions and have hard conversations!

You can see more tips on how to keep your project on budget in this article.

Posted on: November 20, 2017 07:59 AM | Permalink | Comments (8)
ADVERTISEMENTS

"Two roads diverged in a wood, and I... took the one less traveled by, and that has made all the difference."

- Robert Frost

ADVERTISEMENT

Sponsors