The Money Files

Being in control of a project budget is a big responsibility. There's tracking to do, dealing with suppliers, potentially time recording or approving timesheets, invoice tracking and reporting.

Once you have agreed a budget tolerance with the project sponsor, it's your responsibility to keep the project on track and make decisions about spending. Provided you are on track with your budget forecast - whether you use Earned Value Analysis or not - within reason how you spend the money to deliver the end product is up to you.

So how do you make those decisions?

The rule of thumb I apply is: would I make this spending decision if it was my money?

Let me give you an example.

Consider this: you are managing a software development project, which requires software and new hardware to be rolled out to 25 offices. Each office needs new computers, printers and scanners as well as the software. You have worked out a good estimate of how many pieces of hardware each office needs, and you are using this to guide you as you visit each office in turn.

You arrange to meet the manager of one of the offices and when you arrive you realise that he has taken on three new staff to support the growing needs of the business. They all need new computers and the office will need an extra printer as a result. None of this was originally in your estimates.

Should you buy the extra equipment required?

Let's assume:

• The budget is on track
• Buying the extra equipment won't push you over acceptable spending limits
• The equipment is genuinely necessary.

In that case, why wouldn't you buy the extra equipment?

OK, you could say that the new staff and the incremental growth at that office is out of scope. You could argue that the manager will have to locally fund any new equipment above and beyond what you had planned. But what's the point in that? If it was my money I'd decide it was the right thing to do for my project stakeholders and the project overall. So I'd do it.

Let's take another example.  Another software project. It's a really small project to launch a non-critical reporting system. The standard project plan includes some disaster recovery testing effort. The DR test environment and exercise will cost about £600 (as I said, small project).

Would I spend my money on that? No. On assessing the risk, I'd conclude that it was worth the financial saving (and the time) to not go ahead with that task.

Go through the approvals internally if you have to. Drop budget items in and out of scope with the proper internal control. But look at the budget as if it coming straight from your pocket and make your decisions informed on what that tells you.

Ask yourself: would you spend your own money on the project? If not, why are you doing it?

Does your project or program have a resource management strategy (RMS)? While they are mainly used in program management, you can also find an RMS useful in a project environment. This is especially the case if your project is not affiliated to a program and you have to work it out how to handle resources yourself.

An RMS sets out how the project or program will get and manage the resources it needs to achieve the change required – after all, projects are about delivering change and you need resources to do that. “Resources” is not just an unfriendly word to describe people. Resources can be:

• Money;
• Buildings;
• Equipment;
• Technology;
• Services, and of course;
• People.

The people element can include temporary staff, permanent staff, contractors or part-time employees.
 
An RMS helps you manage the approach to using these. Not convinced? Here are 7 reasons why you need a resource management strategy.
 
1. It describes how the human resources requirements will be managed. This includes internal and external resources. How will you keep their line manager informed? Will they be part of a matrix organisation and if so how will this work in practice? Will you have the people reporting directly to you instead?
 
2. It describes how you will manage the transfer of knowledge and skills back to operations when the project has finished. This part of the RMS can be an input into the training and communications strategies.
 
3. It defines the dispute resolution process for when resource conflicts happen. And they will! Having this documented in advance will help you deal with issues as they arise. You will already have plans for how to fix problems, for example, when resources are called on to business as usual work or other projects. Who will arbitrate? Will it be the program manager or a board member? Can you solve conflicts yourself or do you need someone else to look at the overall priorities of the project portfolio?
 
4. It sets out how you will resource business as usual activity when you are using project staff for your project. The company still needs to operate, even when project resourcing demands are high. The RMS acts as a prompt for discussions with line managers. You can use it as a basis to ensure that they have plans in place for when they need to resource the ongoing commitments for their departments.

5. It defines an approval process for getting people and money.Don’t underestimate this! It really does help to know in advance about how to get resources for your project. It will save a lot of time and negotiation if you have already talked to the process owners and other people involved and already have this written down.
 
6. It defines the accounting and financial reporting procedures for the project. An RMS can also be used to determine how you will get financial resources, how you will spend it and how you will monitor it.

7. It defines the procurement strategy. You might not need an entire procurement strategy for your project or program, so you may find that this section of the RMS just references your corporate procurement process. This explains how you go about buying things and what arrangements or contracts need to be in place.

Remember that resources are not just people! A resource management strategy can help you be a helicopter project manager and see the big picture for all the resource needs on your project or program.

Have you used one or got any tips? Let us know in the comments.

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