Project Management

The Money Files

by
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.

About this Blog

RSS

Recent Posts

Spring clean your portfolio: Setting clear priorities and roadmapping

Spring clean your portfolio: Resource management

Spring clean your portfolio: Portfolio review

3 Types of programme cost (that are not project costs)

How to keep a business case up to date

Categories

accounting, agile, ai, appraisals, Artificial Intelligence, audit, Benchmarking, benefits, Benefits Management, Benefits Realization, books, budget, Business Case, business case, carnival, case study, Change Management, checklist, collaboration tools, communication, competition, complex projects, config management, consultancy, contingency, contracts, corporate finance, Cost, cost, cost management, credit crunch, CRM, data, debate, delegating, digite, earned value, Energy and Utilities, Estimating, events, FAQ, financial management, forecasting, future, GDPR, general, Goals, green, Human Resources PM, insurance, interviews, it, IT Strategy, Leadership, measuring performance, merger, methods, metrics, multiple projects, negotiating, news, Olympics, organization, outsourcing, personal finance, pmi, PMO, portfolio management, Portfolios (PPM), presentations, process, procurement, productivity, Program Management, project closure, project data, project delivery, project testing, prototyping, qualifications, quality, Quarterly Review, records, recruitment, reports, requirements, research, resilience, resources, Risk, risk, ROI, salaries, Scheduling, scope, small projects, social media, software, Stakeholder, stakeholders, success factors, supplier management, team, Teams, Time, timesheets, tips, training, transparency, trends, value management, vendors, video, virtual teams, workflow

Date

Spring clean your portfolio: Portfolio review

Here is the Northern Hemisphere it really feels like spring has sprung. Evenings are lighter, there is less rain (and while the garden won’t thank me for saying it – we had a soggy start to the year so this is something I’m really pleased about) and I don’t know about you but I’m feeling like I’ve got renewed energy for a spring clean. It truly is the season of starting fresh.

That goes for project portfolios too. If you haven’t looked at the work you’re doing across the organisation, across your department, or even simply your personal workload, then now is a good time to take stock of what’s still outstanding and what (maybe) is no longer relevant.

Are you ready to spring clean your portfolio? The way I’ve been thinking about this is in 3 steps. First, we assess and rationalise, which I’ll talk about in this article. Then we review resource optimisation and reallocate where necessary. Finally, we set clear priorities and a roadmap to take us through the rest of the seasons until it’s time to review again.

Step 1 is decluttering – you might have already done some spring cleaning at home, and now is the time to do the same for your work! So let’s share some strategies for renewal and realignment.

Review the current portfolio

First, take a look at the current project portfolio. Make sure your list of projects is up to date, and that it’s complete. There shouldn’t be any projects that have snuck on to the list without the proper approvals, but if there are, add them formally.

Check the basics for each project: they have formal approvals, there is an assigned project manager, they are hitting their governance milestones or anything else that is the normal for your portfolio.

Identify performance issues and misalignments

Next, identify performance issues, overlaps where several projects are tackling the same thing, and any misalignments with strategic goals. Make sure reporting is up to date and source new reports if they are not. Look for milestones that have been missed or risks that are not managed. When was the last time there was a peer review or an audit? Check that each project still meets its financial objectives and is still viable, with a business case that has been recently reviewed and a benefits case that still makes sense.

Review the ‘go’ criteria

Refresh your criteria for project assessment. Remind yourself of how decisions are taken about pausing, continuing or terminating projects. Do you need to update any criteria or measures around financial performance tracking? Perhaps there are new metrics to include.

Review how resources are allocated to live projects and check everything on the list is a good fit strategically. You might not end up changing any of your criteria or measures, but it’s still worth the effort to run through them and check they are still fit for purpose.

Involve your stakeholders

Finally for this step, talk to stakeholders so you can build in their perception of project value and potential. Are there any projects that sponsors have fallen out of love with? If so, these could be taken off the list and the resources reassigned to projects that will add more value.

Next time, I’ll look at step 2 in your spring cleaning plan, which is dealing with resource optimisation.

portfolio review

Posted on: May 01, 2024 08:00 AM | Permalink | Comments (2)

Economic vs Financial Appraisals

economic vs financial appraisals

Let me see if I can make the difference between economic appraisals and financial appraisals interesting….

They are both covered in the UK Government’s Better Business Cases document. Here’s my take on what they both mean and why you’d want to use them.

better business cases

Economic appraisals

The document says that economic appraisals are all about value and benefits from the perspective of the stakeholders, users, and wider societal impact. They consider “all social, economic, environmental costs and all effects on public welfare.” Remember, this is a government publication, so the assumption is that projects will be for the public good. Your project might not have an effect on public welfare, but you can imagine that it will have an effect on the project’s customers or end users.

This is the core of a business case.

It includes an element of financial information as well, such as relative prices, direct and indirect costs, opportunity costs where there are any, environmental costs, and benefits however these play out. You’d also include staff time.

It would exclude inflation, tax, sunk costs (let’s hope there aren’t any of those), depreciation of assets, and other accounting treatments.

Financial appraisals

Financial appraisals are purely the monetary calculations: can we afford it? Where is the money coming from?

They consider cash flow, budgets, and accounting practices.

This would feed into a business case because there is no point in progressing a project that you can’t afford to complete or that would not provide adequate financial returns where these are measured.

A financial analysis would look at current pricing, cash-releasing benefits (like delivering a portion of the project early so it could start to ‘earn’ for you), capex and opex costs, tax payment, and inflation.

The do nothing option

A business case should also include the minimum possible approach, which is normally the ‘do nothing’ case against which to compare your alternative(s).

Complete an economic appraisal for that option, too, taking into account what stays the same and the benefit cost ratio of doing nothing.

In my experience, it’s always worth including a ‘do nothing’ option as it really makes it clear to execs what they are giving up if they choose to reject a project.

Is an economic appraisal a new thing?

I don’t think an economic appraisal is a new thing, but I think project managers are more used to seeing it be called a business case or an options analysis.

Once you have created an economic appraisal for a variety of options (including the ‘do nothing’), there is likely to be a clear option that stands out as the best course of action. If not, there might be a few to choose from with subtle differences – leave the choice up to the execs to debate in that case!

I think the thing about an economic appraisal is that it forces you to think wider than the numbers. You’re looking for social and environmental benefit, community impact, and return instead of just a simple ‘if we do this, we’ll get paid that in a year’. It’s a way of reframing the business case conversation into something that is wider and more rounded, helping teams become aware of the full impact and benefit of their initiative instead of simply the bottom line.

And I think that’s a good thing. We should be making rounded, fully informed decisions instead of simply relying on the top level numbers. We need to be aware of the full impact from idea to decommissioning and what impact that is going to have on the world around us, not just the bank account.

By adopting the language of economic appraisal instead of business case, we might be shifting the thought process into a richer dialogue with ultimately better decisions being made. What do you think? Let me know in the comments!

Posted on: October 11, 2023 08:00 AM | Permalink | Comments (0)

6 Types of Projects: Which one are you working on?

There are loads of different ways of categorising projects, but I came across a way that was new to me recently. There are 6 categories of project outlined at high level in a UK government publication about creating a project business case.

I’ve summarised them briefly below.

types of projects

1. Standard building projects

Let’s start with the building projects. A ‘standard’ building project is one that pretty much uses a building blueprint that’s already available. There are no special design considerations, no fancy extras or design features to incorporate.

Examples:

  • Office buildings
  • Residential buildings (not self-build or fancy architect-led projects)
  • Airport terminals
  • Hospitals
  • Schools

2. Non-standard building projects

Anything that is not a standard building construction project is a non-standard project. These are constructions that have special requirements or must meet certain conditions, perhaps dictated by use or space or the requirement to incorporate some high-tech feature.

The environment around the construction might also make the project non-standard. For example, if the site has some special archelogical, scientific or envrionmental significance. Or it could be that the building is going on the side of a mountain or in a cave, or something like that.

Examples:

  • High-tech facilities such as labs or research facilities (think: a polar exploration hub)
  • ‘Destination’ buildings: when we visited the Arctic Circle, we stayed in a hotel that had rooms with huge windows in the ceiling for watching the Northern Lights.

While I was in a previous role, the company acquired an old building and changed its use, but had to keep the existing façade. I’d put that project in this category as the complications around what we could and couldn’t do within the footprint of the building made everything quite a challenge.

3. Standard civil engineering projects

Straightforward civil works would use tried-and-tested techniques. There’s not much else to say about these.

Examples:

  • Roads
  • Utilities like electricity plants or water treatment facilities.
  • Railways.

4. Non-standard civil engineering projects

Do you see the pattern? Unsurprisingly, non-standard public sector and civil works include things that don’t fit the mould of the standard work. They are non-routine constructions.

Examples:

  • Upgrades and extensions like the Jubilee line extension on London’s underground system
  • Utility projects where the environment is non-standard or constrained in some way
  • Build projects like railways that require additional features or technology.

5. Development and equipment projects

If you’re not building something physical, you might be building software or doing some other kind of development. These projects move an organisation forward and help get things done. They are often the work that underpins strategy delivery and can be big or small.

All the projects I’ve ever worked on fall into this category, as I don’t work in construction or outsourcing (which we’re coming to).

Examples:

  • Software development
  • Process change
  • Provision and installation of equipment into facilities.

These could be cutting-edge tech deliveries or simply upgrading your old phone system or something equally routine.

6. Outsourcing projects

Finally, projects that have the end result that something is outsourced. That could be providing a client with cloud computing solutions or running a building for them, and typically it’s all about ‘something as-a-service’.

Examples:

  • Equipment maintenance
  • Setting up a new helpdesk for IT queries
  • Providing whatever it is you provide as a package to the client where they have outsourced provision of that service or product to you.

Do you think this is a good way to split up projects? I’m not sure that I do – there isn’t enough granularity of the ‘development’ projects for me. Maybe they are all unique and we don’t need to split them between standard and non-standard. Most of the things I’ve worked on have felt non-standard at the time.

What category of project do you work on? Let us know in the comments below!

Posted on: July 18, 2023 08:00 AM | Permalink | Comments (7)

Closing out a Programme

Let’s say you have been through your programme and are ready to close it out. There is obviously quite a lot to do, and the finance elements will be part of that. Here’s what to consider when closing out the financial management of a programme, inspired by the Standard for Programme Management.

Benefits stewardship

The programme will have created benefits, some of which have probably been realised as the work progressed. Towards the end of the programme, you may need to estimate the ongoing costs for making sure those benefits continue to be realised. For example, maybe recruiting an additional person to manage some deliverables once the programme team is stood down. This should last for as long as the benefits are going to be tracked for, or as long as you think is appropriate.

Any ongoing costs that will be passed to the operational teams should be made clear and budgeted in their ongoing profit and loss accounts for the department.

Leftover funding

Will you have any money left at the end of your programme? Probably not – in my experience project and programme teams tend to spend everything allocated to them!

On the off-chance that you do have funds left – let’s say, in the case of closing the programme a little earlier than expected – you should be in a position to hand some funding back. Any contingency funds that have not been used can be returned to the corporate ‘pot’.

Reporting

You’ve been creating financial reports for the duration of the programme, and those will now stop as the programme is wound up. However, stakeholders may be relying on that information. If there is the expectation that some of the financial reporting is still required, perhaps in a slightly different or amended format, you should put in place options to make that happen.

For example, perhaps another department can pick up running the reports, or they can be automated.

Tip: Even if you are automating the reports, please make sure each report has an owner! When we migrated a load of reports from a legacy system into a new one we weren’t sure which reports were used and which were no longer required because there was no data ownership. We didn’t migrate a bunch of them, figuring that if they were missed someone would say! Nobody said anything, so it’s probably those were simply no longer required, even though the system produced them regularly.

Sustainment

Sustainment of a programme is the work required to make sure the outcomes are maintained going forward, once the programme structure itself is no longer there to support them. Beyond benefits, there might be some additional funding required to sustain the programme’s vision, achievements or outcomes. For example, perhaps you implemented new tools and now the business needs to have someone in post to maintain that software.

In my experience, people who enjoy the environment of delivery are not always the same people who enjoy the day job. You may find that programme resources are not interested in staying on in ‘day job’ roles to support the ongoing running of whatever needs to be sustained, so you could end up having to budget for hiring new roles.

Close out checklist

At the end of your programme, check to make sure you have the following aspects covered from a budget perspective:

  • Financial inputs to the programme closure report and any final financial reports or closure statements
  • Updates to the financial management plan if necessary
  • Updates to the lessons learned database or organisational knowledge repository
  • Any related documents that might be useful in the future
  • All invoices and supplier contracts wrapped up and closed
  • Programme budget and cost centre/cost codes shut down so no further work can be allocated to them.

What else would you consider when closing out a programme budget? Let me know in the comments!

Posted on: June 07, 2022 04:00 AM | Permalink | Comments (1)

Pivot Tables for Beginners [Interview with Nick Nuss]

pivot tables headerNick NussRecently I spoke to Nick Nuss, data manager, Excel expert and blogger. I like to think that I’m OK at using Excel, but one of the things I don’t understand is pivot tables. So I figured it was about time I learned how to use them.

Luckily, Nick was on hand to explain all.

If you’ve ever struggled with pivot tables, you’ll want to read this interview.

Nick, how can I use Excel to better report on data?

Excel is very versatile. You already know this. As a project manager, you probably have Gantt charts and templates saved out. Excel solves many of your data problems. As a data manager myself, I use Excel in a variety of ways but the functionality I use most is the pivot table.

OK, basics please. What does a pivot table do for me?

Pivot tables allow a user to report on a large data set in a table format. For instance, if you have to track anything in excel, you can report on it. Financials, time, counts of sick days, anything that you can lay out in a table, you can report on it.

So what do I need to know?

First, I want to tell you about table design. Then we’ll move on to creating your pivot table. Lastly, I’m going to dive into how to best use the pivot tables.

Great. Tell me about tables.

Good table design is essential for good reporting. Garbage in is garbage out in the data world, so if you create your table in a poor way, your reports will not be accurate.

Let’s talk lingo for a second. I will be referring to rows as “records” and columns as “fields” from now on. When we have a record, it will be a unique instance that we want to track. This can be per person, per date, per person per date, etc.

The lower down you go, the more information you can get later on. By tracking at a department level, you may not get the results you want later had you tracked things at an individual level.

What about fields?

Fields are what we will use in the pivot table to describe the records. These can be dates, IDs, financials and numbers to tell us information about what has or is to happen.

It’s important that fields have the correct formatting. For instance, financials should always be listed with the financial signs, and dates should always be listed as a date. Without the correct formatting, when you go to use the data, your dates may not calculate correctly (i.e. the difference between 11/30/2017 and 12/1/2017 is one day, but if you do not have it in date format, excel may calculate it as 1212017 - 11302017 = -10,090,000!).

Got it! Anything else I should know about fields?

Fields can be further broken down into two levels; descriptors and metrics. The descriptors are ways to split the data, such as department and job role. The metrics will be the things you want to control down the road, like your financials or hours.

You can certainly use metrics as descriptors, such as people who work more than 40 hours per week, against people who work fewer than 40 hours.

How do I do that?

It is usually easier to create the data table before creating the pivot table. You can create these metrics with functions like “=if()” which will take on one value when logic is true and another when logic is false. You can even have the function return “true” or “false” if you don’t enter what to do.

To do this, set up this equation =if(CELL >= 40, “what does it do when true”, “what does it do when false”). Be sure to replace “CELL” with the correct cell for your records! You can then click and drag this down your table to auto populate.

IF formula in Excel

This image shows the beginnings of a data table with the IF formula for working out whether someone works more than 40 hours a week.

OK. Any other tips for the data table?

A good rule of thumb is to also have one field set as “count” where you enter a 1 for each record. This allows you to report on the total number of records later that meet a certain criteria.

Keep your records clean as they are created. Fill in each field for the record and keep them accurate. If you can track numbers as a decimal, do so. The more exact you are, the more exact future reports will be.

Each field needs a label name in record one for a pivot table to work. Be sure to name these with descriptive names that you can use later. These labels should be unique for later on. It’s also good practice to label these with the field type in case you forget. Keep “date” in the name for any dates and “amount” for any financial values.

Now I’ve got a good quality data table. Are we on to the pivot table?

Yes, creating the pivot table comes next. Go to a new tab within Excel to keep your table data separate from your pivot table. Select cell D6, which will give ample space for your pivot table to populate. This is will be the upper left of your new report. When we discuss how a pivot table works, selecting down and over will make more sense.

Now, in the ribbon at the top, navigate to the “Insert” tab and select “Pivot table” from the left.

select pivot table

This will open the data selection. Click where it asks you to enter the range for the data.

Now, click on the worksheet tab where you entered your data and select the upper left cell of your data (this will be field A and row 1). Next, press ctrl+shift+end on the keyboard (PC shortcut). This shortcut will select all records and fields in the table. Press enter and you have successfully created your pivot table!

select the data source

This image shows selecting a portion of the data source for creating your pivot table. The full data table is shown below.

full data table

Pivot tables work best with lots of data. In this table you can see resource names, hours worked per week, whether or not the hours are above 40, a field for 'count' and the week number. That gives lots of metrics to analyse and report on.

Excellent! Is that it?

Not quite. The third step is reporting from your pivot table. By selecting the area of the pivot table that we had before, a wizard will appear at the right. The top section will show all of your fields from the data table and the bottom will contain four quadrants. The lower left quadrant will be where you place what descriptors you want for your data. In the lower right, you will place the metrics you want to display. You can still use your metrics in the lower left quadrant, but you cannot report on descriptors in the lower right.

sum of hours

In this pivot table, we've calculated sum of hours per person worked on the project overall during the first 3 weeks.

My favourite part about metrics is you can use the drop down to select properties, and display an average, sum, or percent of the total.

The top two quadrants are used for additional analysis. If you wanted to cross your descriptors by ANOTHER descriptor, you would want to place the second criteria in the upper right. The upper left quadrant is used as a filter, which tells your report “only by these records.” This limits the records to certain selected values, but they do not necessarily show in the report.

average hours

This pivot table shows average hours worked by employees who work over or under 40 hours. We can also add in more columns and see hours worked per week per employee as in the screenshot below.

hours per week

That’s really helpful! I think I get it. Anything else I should know?

You can create any number of robust reports using a pivot table. The value of using pivot tables grows with the size of your data table. The larger the table, the better analysis you’ll get. Pivot tables are fast and easy to create. You will be amazed at how quickly you can report on things in Excel using pivot tables.

For more advanced pivot tables, you could also get data out of a database or Access file as long as you select the data as an import. You can do this from the data tab to allow you to select the information in a pivot table! Excel is amazing.

Thanks, Nick!

About my interviewee:
Nick Nuss coaches and blogs about the super power of Emotional Intelligence over at VocationCultivation.com. He is also a medical claims data manager at a Fortune 500 company and an Excel expert. His mission is that everyone unlock their full career potential by mastering their emotions.

Posted on: November 06, 2018 10:48 AM | Permalink | Comments (10)
ADVERTISEMENTS

"Humor is but another weapon against the universe."

- Mel Brooks

ADVERTISEMENT

Sponsors