The Money Files

What would your project sponsor think if you leaked sensitive company information or financial data to a third party?

Maybe you think that you'll never have to answer that question because you subscribe to the PMI Code of Ethics and Professional Conduct, or because your personal ethical boundaries mean that you would never give away company secrets under any circumstances.

OK. But what if I told you that employees at Google, Barclays and the Pentagon all leaked sensitive information without knowing about it?

According to a new guide from document collaboration software firm Workshare, metadata in documents can give away company secrets.

What's metadata? It's all that stuff Microsoft puts into your document: comments, the version history, and corrections made through the 'track changes' feature. Metadata is automatically added to Microsoft Office documents whenever a document is created, edited or saved. If you use collaboration features such as opting to record your changes in PowerPoint so that you can send them back to the document's original author, then all that is stored as metadata too.

Document properties often store the name and organisation of the author. If you repurpose a PID, for example, to use for another client, be careful about what detail is stored in the properties that could give away who else you work with.

The Workshare report details several widely publicised, high profile cases in which metadata has landed organisations in hot water. For example:

• Google let slip financial forecasting information which was hidden in a PowerPoint document which was circulated to the Wall Street community.
• Barclays accidentally shared contract information in hidden columns in an Excel spreadsheet when it submitted a bid to buy assets from Lehman Brothers.
• The Pentagon leaked information about the death of a U.S. agent in a PDF document with hidden information.

Even if you aren't dealing with multimillion dollar deals or sensitive financial models you should still be careful about what you could be unwittingly sharing. Circulating financial information about your project could be commercially damaging even if it is a small project. Worse, the company could end up in legal hot water with fines to pay if sensitive data is leaked. No project manager wants to be the one who got the company sued.

So should you stop using track changes? Of course not. Metadata is useful for identifying, indexing and managing documents. Track changes makes editing project documents that have several rounds of revisions possible. Just be careful about what you send outside the organisation.

The report does recommend that you make an effort to strip out comments and revisions before you send documents to people outside the company.

Here are some tips for your documents:

• Remove the names of reviewers and the comments they have entered into the document or revisions they have made.
• Check document headers or footers in every section to ensure logos are removed.
• Remove hidden text.
• Delete hidden columns and worksheets in Excel; don't just hide them.
• Delete macros in the document.
• Turn off 'fast save' in Word as this only stores revisions which allows readers with some text editors to see how the document has evolved including anything that was deleted.

In short, be smart about what you circulate to avoid exposing your company's financial data or other secrets when you share documents.

You can read the whole report here: www.workshare.com/collateral/misc/Dangers_of_Document_Metadata.pdf

Accounting cycles rarely match up with project lifecycles and that is a fundamental difficulty for project-based organisations and project teams. It is particularly difficult at times like now when project managers have to deal with their Finance departments working on half-year forecasts. 

What is half-year forecasting?

Half-year forecasting is the process that Finance departments use to look at what the company/division/department has spent so far through the year. They compare this to what was budgeted, and use these numbers to predict what the full year financial forecast is likely to be. Sound familiar? It’s similar to processes used in Earned Value. 

Half-year forecasting is simply a method of finding out if the company is on track to hit its financial targets. If the organisation has spent a lot more money than planned (or a lot less), it is likely that the overall budgets have not been set effectively. Half-year forecasting is the opportunity to review the figures and make changes to the budgets to ensure the company hits its targets.

When do you do half-year forecasting?

Er… at the half-way point through the year. It is only half-year forecasting time now if your financial year runs from January to December. Some companies have financial years that run from January to December and cover the same time period as a calendar year. Some companies don't.

If your company doesn't have a financial year that coincides with a calendar year the other options are:

• A financial year that coincides with the tax year, and starts and ends in April.
• A financial year that ends in July.
• Some other arrangement.

If your company falls into the ‘some other arrangement’ box, you might be able to find someone to explain to you why your company manages its financial year the way it does, but frankly it doesn’t much matter when the year starts and ends as long as you know. In many cases the reasons why your financial year runs the way it does will be lost in the mist of times.

How does this affect my projects?

Your project could be at any point in its lifecycle at the point that half-year forecasting is taking place. During the forecasting process, the company is looking at how much it has spent and what it has left to spend from the budget for the remainder of the year. You may get asked to provide project budget information to feed into this forecasting process.

What, even my small project?

No, maybe not small projects. Half-year forecasting tends to deal with company profits and so the numbers are quite big. If your small project has a tiny budget then it probably won’t have an impact on the figures. Forecasting is more likely to affect a big projects running over many years or programmes.

What do I have to do?

If you use Earned Value then sending the Finance team the EV figures may be all that they need. If you don't use EV, then compare what you have spent to what you have forecast for the project. Providing the Finance department with the estimate to complete will also be useful for them as they can use this to refine the forecast for the entire company for the remainder of the year.

If the Finance department are interested in your project budget numbers to the half-year forecasting process then they will ask you for input. The only other point I’d make is that sometimes these requests can come at the last moment, so make sure your budget tracking is up to date!

Image: renjith krishnan / FreeDigitalPhotos.net

Math (or maths, as we'd call it over here) is essential to managing projects. You need to know how to construct a budget, use the data from time-tracking software and calculate lag and lead times for project tasks. And don't get me started on Earned Value.

But many of us find math tricky. Laura Laing, in her book Math for Grownups, tries to put that right.

"Remember, it's only a tool...It's a language that describes how our world fits together," she writes. "Math enables us to make predictions and quick decisions. Math helps us feel powerful and confident."

Trying to remember how to calculate ratios can be hard when school was the last time you got out your scientific calculator. Laing writes:

"It's completely understandable if you struggle with some basic math facts...When you understand why arithmetic works, you can make up for most any math fact that you've forgotten."

Her book aims to explain why math works, to give you both the skills and the confidence you need to tackle everyday math problems. And if you can't work it out yourself after reading this book, she recommends heading to the internet to find the formula that you need. This is not a book about making things harder than they need to be just to prove you can do long division in your head; there is no shame in using a calculator.

Math for Grownups is a book about changing your attitude to math. It covers skills like estimating and fractions, and explains them in the context of real world examples like using discount coupons in the supermarket. That doesn't make it a basic text.  Before you are 50 pages in to the book Laing is explaining negative exponents. The book has a useful appendix listing formulae and a glossary of math and financial terms.

Math for Grownups is also about reclaiming numbers for yourself. Math is not there to constrain you. The underlying message throughout the book is that math is your friend. Should you buy that snazzy new ice cream maker? Math will help you work out if you can afford it but even if you can't, the choice is still yours.  "Just remember that you-not the numbers on the page-make the final decisions," writes Laing.

Throughout the book Laing presents simple tricks to make equations and calculations easier. Key to this is her philosophy about estimating. She introduces tips like dropping the fractions off numbers, doing the math with whole numbers and then adding the parts back on again. Doing math that gets you an answer that is good enough is all that is required. She writes:

"All through your math education, you were taught precise was to solve problems. And you may have come away from that experience thinking that math depends on that degree of precision.

Sure, math is an exact science, but you get to decide when you need a precise answer and when an estimate will do. The key is thoughtful estimation. Make sure that you're not cutting so many corners...that you end up with an estimate that is either too small or too large.

And when you get your solution, ask yourself this question: Is it reasonable?"

There are a lot of real-world examples from buying a car to scaling recipes to deal with a glut of tomatoes from the garden. There is nothing specific about work-related math like project budgets although Chapter 8 deals with household budgets. That section also looks at salary negotiations and now to calculate how much that raise is really worth if it pushes you into a higher tax bracket.

Laing gives readers the tools they need to get more confident with managing numbers. One way to do this is to practise in situations where the future of your project is not at stake, like calculating grams of fat on food labels, or working out how much each family owes when renting a holiday villa with friends.

Laing encourages us to have a relationship with numbers that puts us back in control. If you feel like you struggle with calculating ratios and fractions or percent (for example when working out contingency budgets) then this is a confidence-boosting book.

Transcription:

I’m standing on the banks of Lake Como in Italy and as I’m here I thought it would be a good opportunity to talk to you about managing projects where you’ve got budgets in two currencies. And I’ve done that. I’ve managed a project where I have had contribution from the French office and contribution made by the UK office.

Managing two different currencies was actually a very difficult thing to do because it meant that overall project accounting was very difficult, very difficult to manage two sets of accounts, if you like, two sets of who was spending what and how that added up to an overall budget figure to put on my steering group reports.

So my advice to you would be to avoid doing that if you possibly can. Make sure if you are getting contributions, people are paying different things from different countries, then you try to convert all of that into one main currency and use that as the way that you report to your stakeholder groups.

The other thing that you could do when you’ve got multiple currencies is to fix your exchange rate so where a contribution from one country or an office in one country or a team in one country might cost a particular amount in Euros, as we’re in Italy, when you wait a couple of weeks that same contribution might be worth something different. So agree with your finance office how you’re going to convert, fix a particular exchange rate and use that for the life of the project.

Every so often I’m asked questions about handling project finances. Here is another batch of Q&A. If your question isn’t answered here, drop me a line and I’ll try to include it next time.

Today we are focusing on tolerance.

You've recommended ranges for budgets as well as tolerances - can you recommend whether to combine these or keep them separate?

Estimates are better if they are ranges. You might estimate your budget to be £90-110k, for example. This will become a narrower and narrower estimate as the project progresses. But when you are discussing budgets at the business case stage, a range is a more appropriate response to uncertainty.

Tolerance is the amount by which the project can be delivered over (or under) budget without anyone being concerned.  It’s usually a small amount represented as a percentage. If your tolerance is a percentage, you will express it as something like +/-5% i.e. you can be up to 5% under budget or up to 5% over budget and still be delivering the project appropriately.

I would not combine tolerance and budget estimates. Set your budget. Then agree a tolerance level with your project sponsor. Apply the tolerance to the budget. You will end up with a statement like:

“The budget for Project Banana will be £90-110k with a tolerance of +/-5%.”

Is tolerance the difference between total cost and contingency?

No. Don’t think of tolerance as ‘real money’. It is simply a parameter in which you operate. It’s the same as saying, “I’ll aim to be at the cinema to meet you at 7pm but the trains aren’t running to the timetable because of engineering works so I could be there anytime between 6.45pm and 7.10pm. That should still give us plenty of time to get tickets and sit down for the film.”

Total cost is the amount (in range form if your sponsor will let you) your project will cost. Contingency is a pot of money put aside in case of unforeseen developments. It is not part of your overall budget and with any luck you won’t have to draw on it. It is for managing project risk.

What is the normal level of tolerance as a percent?

That’s a difficult question! It depends on the project. A project that has many elements that have been done before, an experienced team who have put together comprehensive and accurate estimates, with low levels of innovation and without the risk of new technology could easily have very low or no tolerance. This is because you’ll already know enough to ensure that you won’t need the ‘safety blanket’ of tolerance in delivery as you’ll be pretty sure that you will hit the estimates straight on.

The ‘right’ answer is whatever your sponsor says is appropriate. For organizational politics reasons, or financial constraints, the answer might be zero.  Talk to your sponsor about what tolerances they consider acceptable for the budget.

If you are pushing me for an answer I would say +/-5%. That gives you a window of 10%. If you are swinging outside of that window you will either be tying up money that you don’t really need for the project that could be better spent elsewhere, or you’ll need to go back and ask for more money as your project costs have risen.

Is it customary to add % of budget as ‘miscellaneous etc’ to the project budget and is this the tolerance you are talking about?

Yes, it is customary to add a budget line for unforeseen items. But no, it isn’t tolerance. This is your contingency fund.

Is it any different for PRINCE2?

No. PRINCE2 doesn't specify any particular way to manage project finances. You can read more about project tolerances in PRINCE2 here.

Last year I gave a webinar on managing project budgets, which also included the answers to many questions. You can see the whole presentation online here, via a recording of the webinar.  I’ll have some more Q&A for you soon!   Got any questions?  Leave me a comment and I’ll answer them in a future post.

Read Part 1 here
Read Part 2 here
Read Part 3 here
Read Part 4 here
Read Part 5 here