Keep the records on paper? Electronically? Or shred them? This video will tell you what project financial paperwork you need to keep (and how) and what you can destroy.
It’s the time of year when project managers (and everyone else) are looking to make resolutions. You know, the kind of promises you make to yourself in the dark days of winter and then have completely forgotten by Easter.
On the off chance that you’ll be making resolutions this year, here are some you could consider. They all have a money-related theme, so if you want to brush up your budgeting or polish your financial management skills in 2013, these could be great resolutions for you to adopt. So here we go: 5 promises for better money management over the next 12 months.
1. I will look at historical data for forecasts
When you are managing projects that are repetitive in nature and that the team has a lot of experience of, it’s very tempting to simply let them estimate the length of tasks and assume that they know what they are doing. Most of the time, they probably will. But it is worth validating their estimates against historical data from timesheets and previous project schedules. Use your online project management software to pull up reports of how long things took the last time you did them.
This could be at the level of an individual task, like completing a particular piece of coding, or a project phase, like testing. Or both. The purpose of checking is to make sure that your estimates really are sound and that the people who are estimating are not making the same mistakes about task duration on every project.
2. I will do my timesheets in a timely fashion
This is a personal resolution for you, although you could extend it to all your project team members. The risk of not doing your timesheets on time is that you forget exactly what it was that you were doing. As a result, you block out 8 hours per day for a task called ‘project management’ which doesn’t give you any breakdown of how you actually spent the time. Worse, you could be booking time to one project when in reality you got pulled off that project to spend half a day on some other project. These things happen in real life, to you and your team members.
By aiming to complete your timesheets at least weekly you’ll not have long enough to forget what you were working on!
3. I will understand Earned Value Analysis (or teach someone else how to do it)
If you don’t understand EVA, make 2013 the year when you get your books out and study how it works. If you do understand EVA, make a resolution to share your knowledge with someone else this year. Even if you don’t use EVA on your projects, it is a very useful skill to have.
4. I will do my expenses on time
Most project managers will incur expenses in the course of their job, such as travel to meetings. Not doing your expenses on time means that you are out of pocket. Many companies only pay expenses once a month in the monthly pay run, so don’t let your expense bill mount up – that’s effectively a loan to your company.
Get your personal paperwork in order by keeping receipts together, noting down your mileage after every trip and understanding the schedule for submitting expenses so that you don’t miss the deadlines.
If your expenses are being cross-charged to your project it is even more important to get your expenses in on time. If you don’t, your project budget will reflect that you have more ‘in the bank’ than you actually do.
5. I will review my budget quarterly
You do this already, don’t you? If not, make 2013 the year when you review your project budget forecasts regularly. If your project runs over two quarters you’ll probably be asked to do this by your finance team anyway, but even if you are not, it is still good practice to get out your spreadsheets and just check that you are still on track to stick within your budget tolerance limits.
Have you chosen any of these as your resolutions for 2013? If not, what are you having as your resolutions instead?
Project expenses aren’t always spread evenly throughout the life of a project. Understanding how costs are split is one way to make sure that your project budget is appropriately phased. For example, if you will incur more costs at the beginning, then you’ll need to factor that in to the budget. If you will pay out lots of money at the end, you need to factor that in as well, to make sure that you have some money left!
Here are 3 ways that costs can be linked to project activities.
Start of activity
Some projects incur the majority of their costs at the beginning. Examples would be:
In this case, you’ll want to make sure that your project budget is available to you as soon as you start the project, and isn’t phased by quarter or reliant on some cash flow issue being resolved. You’ll need to spend a large chunk of your budget from day 1, so talk to your project sponsor or your project accountant and make sure that the provisions are available for you.
End of activity
Some projects incur costs at the end of the project. This could be, for example:
In this situation, you’ll need to make sure that your project funds are still available to you at the end of the project. Finance teams often review budgets and if it looks as if you aren’t spending much of your project budget, they might ask for some of it back! It’s good to be able to justify why you need to hang on to the cash, so that you guarantee it is still available to you when you come to need it at the end.
Uniformly spread across activity
The third way that project costs can be linked to activities is through being spread evenly across the lifecycle of the project. Some examples of this are:
This is probably the easiest type of split to manage. Regular payments for regular activities means that your budget will be consumed in an even way across the lifecycle of the project. You can quickly see if you are half way through the project then you should be about half way through your budget too.
Of course, one project could use all of these, as different activities could have different spreads of costs. You’ll have to take that into account when you plan how your budget is phased. If that is the case for you, you’ll also have to consider phasing per task/activity/item as well as what the overall profile looks like. That way you can build up a picture of how much money you’ll need when.
Which is the model that your project uses, or do you phase your project budget in a different way?
Andy Murray, Director of Outperform, and lead author of PRINCE2:2009, spoke at the Austerity Debate at Lloyd’s Register in London recently about the role project management plays in this difficult economy.
Each project has an overhead, including the cost of the project manager, the sponsor, a risk budget, the project board and any project support services.
What does it cost if you don’t do projects well? There’s rework, the cost of overruns, poor outputs, under-delivery, consequential loss, and benefits that remain unrealised.
This is the infrastructure related to managing projects and includes any Centre of Excellence overheads, the PMO, support, monitoring, tools, evaluation, assurance, the Portfolio Office and audits.
The holidays are over and we’re into the final stretch before the milestone of year end. This is a great time to get your project financial records in shape and set up systems to help you breeze through the end of year demands from your corporate finance people. Today I’m looking at filing systems.
If your project team members work for you, you’ll probably already have visibility of their salaries, expenses and bonus arrangements. Don’t lump all this in with your ‘project’ records. If the project team works for someone else who has asked for your input to their performance review to award a bonus, or you are responsible for their expenses or timesheets, don’t store this with the project records either. Create a separate, private, ‘Personnel’ filing system for this type of sensitive record.