The Money Files
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
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Date
OK, we’re part way through the year and the reforecasting is already upon us! Unless your budgets have been managed to the penny and everything is on track, chances are you are probably facing some reforecasting for the remainder of the year.
In my experience, many project managers are accountable for budgets but lack confidence in financial health – it’s one of the things I talk to project managers about in my mentoring calls a lot. But the thing is that financial problems rarely appear suddenly. They creep in quietly, in a little overspend here or there, or a supplier delay that doesn’t feel like a lot until it’s pushed your spend into next month and you’re dealing with accruals.
So April is an ideal moment for a quick, painless financial health check before issues harden into forecasts.
What do we mean by financial health?
I mean not the easy question of “Are we on budget?” but the rounded questions about
- How predictable is our spend?
- How confident are we in the forecasts?
- How aligned are we between cost, scope, and progress
Because a project can be on budget and still financially unhealthy. So you need to look at it in the round.
What to look for
You’re looking for:
- Actuals consistently lagging or jumping month to month, especially if you find they aren’t submitted in time so they are regularly pushed into next month to show up in the accounts.
- Forecasts being reworked without clear reasons (not pointing the finger at any particular team…)
- Commitments not reflected in the cost report, although this depends on how you manage your accounting for projects – what you do want to do is share visibility of upcoming costs
- Heavy reliance on contingency, because that’s what it’s there for, right?!
In my mind, the worst is when the sponsor is surprised by numbers that the project manager thought were understood. Because that’s a massive disconnect between what you thought you were managing to and what they think is going to happen.
However, these are not mistakes, they are signals that help you understand what to tweak to get the project finances back under control.
How to get started
It’s not that difficult, as long as you put some time aside to work through what your project finances currently look like.
For example:
- Reconcile actuals vs planned spend and check everything is as you expect
- Sense-check remaining work vs remaining budget and reassure yourself that there is enough money to keep the project afloat until the end!
- Review assumptions behind the forecast and validate them (and ask for more money if necessary, if they turn out not to be true)
- Check alignment between schedule milestones and cost profile, and link in with the finance team to check on the cash flow implications
- Confirm who actually owns financial decisions, because it probably isn’t you when all is said and done. And it’s really helpful to know who you have to pitch recommendations to.
Finances on projects is not just about reporting. It’s also about control, and the reports are one thing and yes we need them, but the data in the reports is how you make better choices about how to run the project.
Don’t leave financial conversations too late. That’s putting off conflict or challenge because numbers feel uncomfortable, and I promise you can get better at project financial management, even if you were rubbish at Maths at school.
Financial control is part of professional project leadership, and there are experts in your organisation with letters after their name who can help. You simply have to ask the right questions and have an idea of what you want to be seeing. And if you don’t see that, you’ll need a few ideas about how you could influence the numbers to bring them more in line with everyone’s expectations.
Small, regular checks prevent uncomfortable conversations later, and are far easier to manage than the change control process where you have to go back asking for more money close to the end. The most important thing is that your numbers are trusted, so start from there, getting accurate data and then see what it’s telling you. |
Posted on: April 23, 2026 10:00 AM
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Comments (2)
| I’ve only recently come across using sensitivity analysis in business cases, but it’s really helpful when you want to test how changes in key assumptions (like costs, timelines, benefits) affect the outcome of a business case. In particular, when you think that you might have over-egged it and you want to de-risk the business case.
Used effectively, it helps identify which variables matter most and how robust your investment case is. Which is want CFOs and finance team decision makers want confidence in, right?
When sensitivity analysis is useful
Sensitivity analysis as a technique is useful:
- When there is uncertainty in cost or benefit estimates
- For high-value or high-risk projects
- To prepare for board or CFO scrutiny
- To support decisions between competing options.
OK, so now you want to know how to do it. Here’s how we incorporated it into one of our business cases.
Start with a base case (your standard forecast). This is your ‘normal’ business case, the one you prepare before the project gets submitted for approval.
Next, vary one key input at a time (e.g. +10% cost, -20% benefits).
Look at the impact on outcomes like NPV, ROI, or payback, or whatever financial measures you use.
Tip: use ranges or scenarios (best case, worst case, likely case) when you present the results back because at this early stage it’s very unlikely that you have defined and finalised costs and benefits so a range gives more flexibility.
What variables can you test?
We used risk and applied a blanket: what if we only get 25% of the benefit because of reasons… That de-risked the benefit that we were claiming and brought the number down to something that felt achievable. Because no one minds if you over achieve on your benefits case!
But you can be a bit more scientific. Here are some variables you can plug into your model.
- Project delivery time (for example, +3 months delay)
- Implementation cost (e.g. +15% cost increase)
- Customer uptake (e.g. -20% of customers user it)
- Productivity gain (e.g. +/- 10% time saved)
- Exchange rates, inflation, resource availability etc etc.
We put the data into a slide at the back of the business case to show that even if the benefit was de-risked significantly, the business case still stood up. If you’ve gone through several variables, you can present an overall most likely case, where you combine variables like an increase and cost and a delay in delivery (because that’s realistic, right?). Highlight where small changes make a big impact, these are your critical assumptions and the areas where you really need to focus if you want to hit your original expectations.
Does it work?
Well, sensitivity analysis is only part of a model where you can show how you got to your workings and why you think your forecasts are accurate. If your base business case is rubbish, any analysis based on that is going to be rubbish too.
I like it because it’s easy and simple and you don’t need to run complex scenario modelling or use software. For example, what happens if we are late? Run the costs forwards 3 months and take 3 months of benefits realisation out of the business case and see whether that still gives you a number your exec team could live with.
It’s a way to reassure decision makers that you’ve considered variables and know what influences your costs, but also builds confidence that even if there are some challenges on the way or with the end result that you could still get value from the project.
What do you think, have you used this before? Let me know if I’m late to the party!
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Posted on: October 19, 2025 11:13 PM
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Comments (4)
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"The rule is perfect: In all matters of opinion, our adversaries are insane."
- Mark Twain
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