Your budget is the ruler by which you measure the project. In this video, Jennifer Bridges, PMP, explains how you can create a budget and manage expenditure for the successful completion of your project.
In Review: 4 Top Project Financial Management Tips
While managing project finances maybe her least favorite part of the project, Jennifer noted it was also the most important.
Her experience working at large organizations and on large projects has taught her these four tips for managing a project budget:
- Defining the budget is documenting the budget
- Break down the components into trackable components
- Implement systems
- Request funds early
If you don’t have a team or organization behind you on the project tasked to manage finances then it’s your responsibility. Jennifer goes into greater detail about each of the above points in the video. We hope it helps.
Pro-Tip: Don’t put all your financial items in one bucket. If you attach names against various line items or organizations, then it’s easy to track those items over the lifecycle of your project. Not only tracking your spending but having a way to document and communicate it is one way to manage it.
ProjectManager founder Jason Westland offered his experienced advice on budgeting for CIO magazine in the article, Project Management: 4 Ways to Manage Your Budget.
Thanks for watching!
Hello. I’m Jennifer Bridges, Director of ProjectManager.
Hello. Welcome to our whiteboard session today on how to manage project finances, one of my least favorite things to do. But it’s the most important. Not the most important, but one of the most important ones.
So here’s the position I found myself in, I’m not sure if you can relate. My previous experience has been with very large organizations, very large projects where there’s actually an organization managing the finances, which is part of project planning. So, we define them, put them in the project plan, but there’s actually an entire group who does nothing but manage the finances.
So what I found myself in is leaving that environment, going into a project where I had to manage these all on my own. Without the group organization behind me, it was a nightmare. But, these are four tips that help me stay out of the red. I wanted to offer them to you too. If you find yourself in this position with it being the least favorite thing that you enjoy doing.
So number one, defining the budget is knowing to document the budget –
defining the budget and documenting it, and communicating it to all the parties. Not only the appropriate project team members, but the people who are in charge of approving it and allocating it. So to have it kind of talked about but not defined or approved, or even allocated is one big thing. Then, identifying the fixed and variable costs and including that in there as well. One of the gotcha’s I found, the more the variable that are harder to manage and track.
Number two, break down the components into trackable components. So it was miserable not having a way to track these at a detail level enough that I could find what was going on instead of just putting things in buckets. So things that I could put people’s names against, or organizations, or different items in the project plan that need to be tracked, so trackable components including that into a specific financial plan that myself or whoever is approved on the project to maintain. Tracking the spend, having a way that’s documented, communicating with the project, giving them an easy accessible way to manage and track their spend.
Number three, implementing systems, again, it’s not only just having the plan, but having a system in place where things are tracked and added to approved. So knowing who’s going to be doing this, where this 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 these budget changes or these financial resources.
Then, number four, requesting funds early, so the approval and allotment process does take time. Depending upon what organization or what environment, sometimes you may be dealing with things that involve the government or other entities or agencies, and so that can take a long time. So instead of waiting until the funding is completed or you find yourself in the red is knowing to do this early and often, because it does take time.
So these are some of the lessons learned that I gained along the way, some of the tips I found that helped me out when I didn’t have an organization or team or group behind me doing this on my behalf, and I hope they’ll help you too. So if you need any additional tips, tools, or techniques to help you manage your project finances, and better yet, stay out of the red, then visit us at ProjectManager.