Project Financial Management: Accounting and Charging
Posted by Elizabeth
As we saw last week, there are three elements to project financial management:
- Project budgeting
- Project accounting
- Charging
I wrote in more detail about budgeting last week, and today we’ll be looking at project accounting and charging.
Is Project Cancellation Always Bad?
Posted by Brad Egeland
Having your project canceled sounds like such a horrible thing. A career killer. But, as strange as it may sound, this is a situation that should actually happen more often than it does. There’s a good reason why this is true. Projects are investments that your organization makes, from which they expect a return. In real life, investments can sometimes go bad.
The same thing can certainly apply to a project. Conditions can change in such a way that the project ceases to become the winner it seemed to be at the outset. Simply stated, management no longer expect the project to have the business impact required to make it wise to keep spending money on it. In many cases, a project such as should be terminated, though in far too many cases, it isn’t.
There are at least three reasons why early project termination usually doesn’t occur, even though it should:
Plodding ahead
You should be testing project viability—or financial justification—on a continuous basis throughout the life of the project. Some organizations don’t do this very well. Others don’t do it at all. Once management approves a project, it simply moves ahead until it’s completed. In today’s fast-paced and constantly changing world, it’s always possible that there will be changes that undermine the original business case for the project. That means that you need to reconsider the economic viability of every project periodically. And the organization should terminate projects that have lost their business case underpinnings.
Project Financial Management: Budgeting
Posted by Elizabeth
Most projects have a budget, so learning how to handle money on projects is a really important skill for project managers.
Project financial management is even more important now, as we work in a climate of increased financial awareness, given the recent economic crisis. Gone are the days – if your organisation ever had them – when companies had money to spend on whatever the company felt like. Now, with increased competitive pressure and a general tightening of the belt all round, as project, programme and portfolio managers we have to be really careful that we are spending money on the right projects, and that we are budgeting carefully when that money is allocated to us.
Five Ways to Calm an Irate Project Customer
Posted by Brad Egeland
During the course of our projects, we often run into situations where our customer needs some massaging. Issues come up, problems arise that are the fault of the delivery team, budget overruns happen, and schedules slip. Rarely does a project team make it through an entire engagement without the customer being upset – often justifiably so – about something.
But what happens when the customer sees red? I’m talking about the situations where the customer is more than a little concerned. Just explaining the situation isn’t going to calm the customer like a normal bump in the project road would. How do you handle this type of customer situation? Hopefully, it doesn’t happen to you often, but when it does you definitely have moments when you may wish someone else was managing the project.
There’s no guaranteed formula for success with the customer in this situation – and depending on how bad it is you may find yourself at best with a canceled project and at worst looking for other employment. But here are five suggested activities to undertake to try to keep the customer from blowing their top, taking their ball, and going home (with all of their cash, too)…. Read more »
Four Characteristics of a Good Requirement
Posted by Brad EgelandThe quality of your requirements can make or break your project. Good requirements give you control over your project development and prevent rework. Less rework means your project has a much better chance at on time and on budget delivery. All that adds up to project success and high customer satisfaction.
What makes a requirement a good requirement? Good requirements generally meet four basic criteria:
- Good requirements m
eet a specific need - Good requirements are verifiable
- Good requirements are attainable
- Good requirements are clear
Let’s look at each of these in more detail…
Meeting a specific need
A requirement is a basically a statement of something someone needs. The something is a product or solution that performs a service or function. The someone may be a company, a user, a customer, support, testers, or another product.
For example, a company needs a manufacturing machine that stamps out widgets, or they need a certain plastic to feed a manufacturing machine that they already have. A bank must process debit card transactions. Alternatively, a requirement is a statement of a characteristic of something someone needs. Proceeding with these examples then, a machine must stamp out 60 widgets an hour. The raw material must be formed in sheets, or it must be red in color. A bank must process at least 1,200 debit card transactions in one hour.