It’s not your money, but you are responsible

I’m not an accountant, but I’ve always liked maths. It is therefore no wonder that one aspect of my job I enjoy is financial management. As an experienced project analyst, I have learned over the years just how vital it is to understand where your project money is going. What value are you getting from the spend? Is the trajectory of the spend meeting the expectation of the delivered benefit?

For project financial management to work it’s essential to forecast accurately, but it’s even more important to ensure you track the spend closely. Effective financial management is crucial in all projects, regardless of scale. We’ve all been there – funds are depleting, but we have much more scope to deliver…

My top tips to keep on top of the project spend are:

1) Regularly compare the actual spend against the forecast. This is non-negotiable. Leverage your company’s time-tracking tools to maintain constant visibility

2) Proactive review, challenge, and correction are key. This is especially vital when project forecasting and financial data are not integrated within a single system

3) Don’t be afraid to challenge a cost. Robust conversations lead to positive outcomes

4) Reforecast for accuracy. When you identify an up or down trend, understand the reason and adjust to maintain accuracy

5) Check the spend against the scope. This will ensure there’s enough money to complete the project and realise the benefits.

I was once brought in on a project that was projecting a budget overrun, and was tasked to review and correct the financial data. What I found was that due to the company’s forecast and actual data not being in the same system, misallocated charges went unnoticed. I performed a thorough review and ensured erroneous charges (time and invoices) were reversed. The timely detection and remediation of these costs ended up preventing what would otherwise have been a significant budget overrun.

Don’t let monitoring slip. Instead of reacting to overspend, anticipate potential issues through consistent tracking, much as you would in your personal budget. While this may not prevent every overrun, it allows you to seek alternative funding in good time, keeping your project (and your benefits) on track.