by Jennifer Bridges, PMP (formerly, Jennifer Whitt)
Managing project finances is perhaps one of my least favorite things to do, but it’s one of the most important aspects of project management. My previous experiences as a project manager were in very large organizations where a whole business unit managed the finances. We defined the finances in the project plan but were not required to manage them, so when I left that environment and had to manage finances all on my own without a group or organization behind me, it was a nightmare. Over time, I learned to implement these four tips to stay out of the red, and I want to offer them to you if you’ve found yourself in a similar position or dislike managing finances as much as I do.
#1 – Define the Budget
First, define the budget. Document and communicate the budget to all the appropriate project team members, including those in charge of approving and allocating finances. Within the budget, be sure to identify the fixed and variable costs, being mindful that the more variable costs there are, the harder it is to manage and track.
#2 – Monitor the Budget
Second, break down finances into trackable components for whoever is maintaining the budget. It is miserable to not track at a detail level; you want to know what’s going on instead of just putting costs in buckets. In my case, I need to be able to put people’s names or organizations against items that need to be tracked. Also, give team members an easy and accessible way to record spend, so that you can manage and track their spend.
#3 – Implement Systems
Third, implement systems. It’s not only having the plan but also a system in place where things are tracked, added to and approved. It’s knowing who is going to be managing this, where it is going to be located, when changes can be made, how it’s going to be done and more importantly, who has the authority to approve budget changes.
#4 – Request Funds Early
Four, request funds early. The approval and allotment process takes time, depending upon the organization or environment. You may be dealing with a government entity or an agency, notorious for long processing periods, so instead of waiting until the funding is complete or before you find yourself in the red, know to request funds early and often.
So these are just some of the practical lessons I learned along the way. They have all helped me to stay out of the red when I didn’t have an organization or team managing finances on my behalf, and I hope they help you too.
If you found these tips from Jennifer Bridges, PMP (formerly, Jennifer Whitt) of value and are a PMP looking to earn PMI PDUs, you might be interested in her self-paced, downloadable courses at PDUs2Go.com.
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