It doesn’t matter how great an idea is or how badly a business needs a certain innovation, at the end of the day, all projects are subject to the limitations of their financial backing. Finance, along with the organization’s mission and the current need at hand, is a key component to the planning and execution of any project. So what is project finance management? What are the best practices for it? How can you take your organization to the next level of financial management? Let’s dive into these questions.
In short, project financial management is putting into place standards and practices that will keep your organization’s projects within budget, reduce waste, and streamline processes. Sound financial management is a process that takes place through the entire life cycle of a project and is a part of each decision that is made.
Good financial management of a project begins long before a project is even conceived. Organizations develop standards and practices for budgeting, procurement, reporting, and planning that hopefully become a part of the adopted culture. Once this has become part of the culture within the organization, sound financial planning is a basic element of project planning.
The first steps in the financial management of a specific project begin early in project planning. During the initiation and planning processes, the scope of the project is determined and an initial budget is developed. This early stage is critical because once a project is underway, obtaining more funding in the middle of a project is very, very difficult. Budgeting during the early stages of a project also sets into the procurement of resources. If accurate and sound financials are not mapped out, the team could end overspending on resources that weren’t needed or could end up not budgeting for enough of what is needed. Either case is wasteful and unproductive.
Organizations and project teams should have a dedicated position that oversees the practices around solid financial management. This role is often designated as the project finance manager. This manager has a variety of tasks and responsibilities but is basically responsible for the oversight of a project’s financial health and making sure that the organization’s standard practices for financial responsibility are adhered to.
Some of the responsibilities of a project finance manager include:
Putting best practices into place and reinforcing them at every level of the organization is the best way to make them a part of your project team’s culture. Ultimately, each organization is different and its standards and best practices will likely flex to fit their specific needs. Here are some best practices for project finance management that can be applied to any organization, regardless of industry or size:
There are many tools available for project finance managers to use in their day to day activities. Fortunately, there is an abundance of financial management software that is aimed strictly at planning, tracking, and analyzing an organization’s finances.
Financial management requires a tremendous amount of data input and output. Any help in automating these processes only serves to make these tasks all the more streamlined. It can be helpful to think of financial management as a project, just like any other. The same principles of planning, execution, and tracking application to the financial side of projects.
Project Management Software is a great tool to help manage the countless moving parts associated with adhering to your organization’s standard financial practices. Project management software can help with project planning, task tracking, resource allocation, milestone tracking, and forecast cost and revenue tracking.
Here are just a handful of the ways that a full-service project management software can help financial management:
The software market is flooded with options for financial management tools. The most ubiquitous is QuickBooks and Quicken. These tools are longstanding brands that have a proven reputation among financial managers. They have been developed and honed over the years to meet the exacting needs of the financial sector. With regards to straight-ahead finance and accounting tools, these are the industry standard. Depending on the organization’s needs, Microsoft Excel is also a very adaptable option that is both cost-effective and flexible. There are countless templates and tutorials online for creating finance-based spreadsheets. Excel is a great tool that is bare bones and provides complete flexibility for individualized needs.
An option to consider is to pair one of these existing tools with project management software. As discussed above, a full-service project management software can streamline processes and help manage the more tactical aspects of financial management. PlanStreet’s case management software is easy to adapt to an organization’s specialized field and supplements the actual tracking aspects of existing finance and accounting software. When coupled, these tools can help take your organization to the next level of efficiency.
Today’s project-driven work environment requires financial vigilance. Financial project managers play an important role in the day-to-day operation of the project and serve as a resource to the entire stakeholder team. Fortunately, there is a wealth of tools available for them that make the job not just simpler, but more effective. After all, financial management isn’t going away anytime soon.