The Money Files

Not all project managers have the opportunity to handle budgets, but when the moment comes, and the project finances are handed to you, it's good to have a plan about what to do.

I spoke to Claudine Peet, lead trainer at Silicon Beach Training, about what project managers need to know about balancing the books.

Claudine, in your opinion what's the one thing that project managers need to know about  project budgeting?

You have to start with an estimate and expect it to fluctuate as the project progresses. To meet cost targets it is often a good idea to have cost tolerances to work within to manage the cost expectations of senior management effectively.

Talking of managing effectively, how can we make budgets effective?

Ensure you know what costs are included in your project budget - often important costs are overlooked such as true resource costs (which include overheads and other costs) and project management and collaboration time to name a few.

A project manager needs to keep on top of all these costs to keep the project on track. How can we use budgets to manage and control projects?

A project budget needs to provide useful metrics to the decision makers for a project so that they are making informed decisions. This will require a degree of analysis such as Earned Value Analysis and investment appraisal analysis. Budgets can also be used to identify key points in the project where decisions need to be made, such as committing a large amount of investment to a particular activity or stage.

Is the budgeting process the same regardless of how big the project is?

Yes, even small projects cost money which has to be funded from somewhere. Decisions will still need to be made on financial investment regardless of the size of project, so the approach to budgeting should be the same, but scaled according to project size.

OK, that's helpful, thanks.  I know that you run training courses specifically about handling financial information.  On those training courses, what is the question you get asked the most?

The most common question is,"How do we keep track of what we are spending?" This can be answered by having clear controls in place about when progress information is required and how it is to be provided. Tracking the progress of the work carried out to date as well as evaluating project expenditure to the same date should provide an actual value which can then be compared with what you should have spent for that time period.

If you had one final tip for people putting together the team for a project, what would it be?

It is strongly advised that one person with good financial knowledge manages the budget - although this is something many project managers are expected to do, it does not mean that they all have the financial know how to do it.

Thanks, Claudine!

Claudine Peet is Lead Trainer for PRINCE2 for Silicon Beach Training, providers of project management training and PRINCE2 Training courses in Brighton, Sussex. For more information about public or on-site project management training, please contact Training Manager Colin Welch.

I came across this tutorial on the P3 Peak Performance blog that I thought was worth sharing. It discusses how to use Microsoft Project's features to do Earned Value calculations and walks you through the process step by step. It's aptly called You Can Get Blood From A Stone.

The Gantthead T-shirts are great - and here's the proof! Which one is your favourite?

I have done two training courses recently: the P3O certification course and Maximising IT/IS Team Effectiveness with Villanova University. The experience led me to consider what you need to take into account when choosing a project management course provider.  And this is what I concluded:

1.  Tutor

Can you find out who is the course tutor? Look them up on LinkedIn, on Gantthead or on their own website. Do they have credibility? Do they have experience in the industry? Have other people written nice things about them?

2.  Other delegates

You won’t be able to find out the names of the people attending the course with you, but you can find out the types of clients that the course provider serves. For example, and ISEB project management course is likely to attract IT project managers. A course run by the Impact Factory is likely to attract people in different industries, perhaps with a more creative outlook.

The course provider may have a list of previous clients on their website, or testimonials from people who have attended courses with them in the past. The job titles and companies of these people can tell you a lot about the sort of delegates who will potentially be on the course with you.

3.  Location

You need to factor in travel costs. Attending a course far away from the office could be good as it minimises distractions. Staying in a hotel also means that you have time in the evenings to focus on your class homework. However, staying away is more expensive and this will either be factored in to the course costs or into your own expenses for attending.

4.  Pre-course work

What pre-course work is made available to delegates? What format is this in? A course provider who offers a range of materials is good. Do you get an e-course or e-book? Is there a CD-ROM of course materials you can browse before the course?  During the course you will probably receive handouts and worksheets, so find out if the company provides a binder and a copy of all the class slides for you as well.

5.  Cost

Finally, consider what is included in the cost of attending. For certification courses like P3O or PRINCE2, is a copy of the manual included – and is it a paper one or an electronic copy? A physical copy is better, especially if you are taking an open book exam where you can take in your annotated manual. Materials aside, consider what extras are included to make your studying experience more bearable. Does the venue provide lunch? Will they offer you slices of cake mid-afternoon, like Maven? These extras may not be important to you, in which case you can opt for a vendor that provides fewer extras and charges less.

It is always a gamble to use a new project management course provider for the first time, but you can reduce some of the risk by making sure that you have done your homework before handing over your cash.  As for your homework during the course – I can’t help you with that...

Arras People, the specialist project management recruitment company and the people behind How to Manage a Camel, have just released their latest Project Management Benchmark Report.  This is an annual, ‘state of the industry’ UK project management study, and each year it includes information about salaries and corporate budgets.  Here are some of the highlights from this latest report.

Training budgets cut

• Over one in five employees say that there is no training budget for this year.
• Only 15% of employees have an agreed training budget or plan.
• 15% of employees state that they would think about funding their own training this year, if they felt they would see adequate returns. This goes up to 47% for contractors, many of whom take advantage of courses run at the weekend.

Salaries static

• Salaries across all respondents was flat: 41% of respondents said there was no change in their salary against last year.
• Some people were lucky: 17% of respondents reported an increase of more than 5% (up from 12% last year).
• Some weren’t so lucky: 18% saw their remuneration fall (down from 27% last year – at least this is improving).
• Nearly a quarter of people reported an increase of between 1% and 5%, but this is mainly employees, not contractors.

As well as looking at salary movements, the survey gathered data on salary amounts.  The mode salary for project practitioners in the public sector is £30k to £40k: 36% of respondents fit in here. In the private sector the mode salary is the £40k to 350k band.

Benefits

Part of a remuneration package is benefits: cycle hire scheme, childcare vouchers, season ticket loan, pension and so on. If you get these, consider yourself luck: 52% of employees reported that they receive no benefits.

The full 36-page Arras People Project Management Benchmark Report 2011 is available on line here.