Project Management in Practice

Beyond the alphabet soup of PRINCE2, MSP, MoP, PMBOK, ITIL, Agile

Tag Archives: Education and Training

How much financial knowledge do Project Managers need?


I attended a training seminar the other day on finance and accounting for non financial managers. It was an interesting training course. If you consider the constraints within which project managers must work to, one is financial. The last time I studied anything remotely close was accounting 101 during the first year of my under graduate degree some 17 years ago.

How much financial knowledge to Project Managers need

The course was run by Victoria University Professional and Executive Development school. Not being a student of accounting and finance, the seminar title seemed like exactly something that I’d be able to use in my project management role. As the course outline was being set out, I realised this was probably the wrong form of accounting for me. The primary focus was on accounting concepts and how to understand company accounts and performance. It appears management accounting is what I should’ve been looking into for making decisions based on numbers.

While I didn’t totally achieve what I wanted to in terms of outcome, it wasn’t a total waste of time either. We focused on importance of cash and return on investment based on various capitalisation models. I had never thought to consider projects, or even business cases along those lines. It is a very useful knowledge to have when considering the straight ROI figures. I will be much wiser to attempts at manipulation along those lines.

This all made me think, how much financial knowledge o you really need to manage projects effectively? Projects are usually incurring expense until such time it is transitioned into the business. Usually project managers will not be responsible for the realisation of he benefits. That means unlike accounting, all the numbers are in one direction. That is why most project managers will be able to get away with limited or no accounting and finance knowledge, as long as te are reasonably good with numbers.

This all changes when the project manger becomes responsible for both generating income and controlling expenses, which is the case in supplier environments. I have a set number of resources that I can utilise for various projects. How I use these resources not only determines success, but also income for my team. In strict sense this is more akin to portfolio management, rather than project management. In this scenario, I found the focus on importance of cashflow and various funding models was very useful.

If you are running a programme that is designed to deliver a financial benefit, I can see a very practical application in terms of analysing if you’re meeting the desired profit targets. Similarly, if your benefits can be quantified in terms of monetary value, then understanding accounting and finance is very useful. However, in general I haven’t found the lack of understanding in this area hasn’t necessarily made life any more difficult, as I am comfortable with numbers in general.

My role involves more than simply managing projects. It also includes forecasting of revenues, participating in the sales process and contributing to strategy among others. I still think understanding management accounting may be very useful. I will probably look to get some more professional development in that area. Again, those in my view are more portfolio management in nature, rather than project management.

What has your experience been? Am I totally off track?

Image Credit: best-financemanager.com

5 things to do when projects go wrong


5-things-to-do-when-projects-go-wrongAnyone spending a decent amount of time in project management field will sometimes have projects from time to time that experience significant difficulties. For all the planning, it is never possible to predict all the eventualities and therefore foreseeing all risks. Projects are by nature more risky than other business activities. It is always useful to apply a few techniques to aid in such situations.

1. Show leadership

An oft repeated cliché this is something that is hard to explain in terms of action. When things go wrong there is plenty of nerves in the project team and management. Project team members often struggle to think beyond their immediate problem. You will find internal executives or sponsors worrying about contractual obligations and any fallout with the customer. Showing leadership in this context is to ensure this uncertainty does not spread into panic. The role of the project manager is to steer a clear course and stopping any blame game that may raise its ugly head. Now is not the time for that. Focus on why after the project.

2. Avoid temptation to simply throw more resource

A common reaction to a struggling project is to throw more resources at it. If the project is of high visibility and management is not able to provide subject matter expertise, they will feel they need to contribute somehow to correct it. The commodity at their disposal is resources. Be wary of this. More cooks do not equate to a better dish. You may need to enlist some mentoring for project team members or even yourself if you are managing a project outside of your technical expertise. Always consider how much time it will take before new resources can contribute to the project. If the issue is time, you will virtually ensure a delayed delivery by adding resources. Also take into account the additional communication required to successfully integrate them.

3. Avoid sugar coating

There is a temptation to play things down as things start going wrong to avoid creating panic. I have found it easier to be transparent about progress. Late surprises will compromise integrity of the project like no other. While your stakeholders likely be upset with you, in the long run it will get you more respect. You need to be clear with communication internally. If you need some of your resources to be allowed uninterrupted project time, you need to give that clear sense of urgency. Otherwise, you will not get the outcome you desire. Clear does not mean antagonising your people. You may need the same people later in the project or for a subsequent project. Do not burn bridges.

4. Undertake review

Very often when a troublesome project is completed, people are so pleased to see the back of it, no learning takes place. This is just about the worst thing you can do. You are not making sure same problems are not repeated. Wait for a reasonable period after project closure to undertake review. While things are still raw, people are more likely to be defensive and the value you get from the exercise will be limited. When you review, structure it so everyone has the ability to come forward with what they could have done better. Start yourself to show the way. If people are forthcoming, leave it at that. Your aim should be to avoid repeat, not to be punitive.

5. Follow up

Do not leave the review in a document and expect the next project to pick up on it. Use the information from your review to recommend training plans and process changes for the organisation. Present these to someone with influence within the organisation. After some time follow up on progress of the recommendations. Improvement takes hard work and tenacity.

Do you have any rules for managing troubled projects? I’d be very keen to hear.

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