For the past several years organizations have been stressing that their project managers should understand the organization’s strategy and then assess how well their projects are aligned with it. But there should be more than just strategic alignment. Strategy and finance go hand in hand. Strategy defines direction while finance acts as the gatekeeper for the resources needed to get there.
Project managers have always understood the importance of finance. It is common knowledge that no project can be approved without financial evaluation. But the way we track project financials depends on the specific project, thus the tracking method is not always structured. Most of the time the project financials are so uniquely tracked, that they cannot be easily incorporated into the organization’s financials and not easily accounted towards the organization’s strategy.
To remedy this, we should add another level of alignment – one which aligns project financials with corporate financials. The two may be fundamentally different but we must find a way to align them or we risk losing important insights.
We are dedicating a live webinar to this subject (synopsis below) on Nov 18, 2011 at 1:00 pm EST. To register, please visit the UMT site (www.umt.com) for details.
Managing the enterprise Project and Portfolio Financials
Project Managers are expected to have complete command of their project costs as financial management became an indispensable tool for managing projects effectively. When planning the project, financials create the framework for scope, identify the level of potential resources, and provide a tie to the enterprise strategy. During execution, financials provide effective control over the use of project resources and offer decision making insights based on project status, risks, and potential future performance. And throughout the lifecycle of the project, financial reporting engages and offers comfort level to sponsors and stakeholders.
The challenge project managers face is how to set the ground for, and communicate using the language of finance in a way that allows aggregation of project costs and benefits to programs and portfolios levels towards effective financial management at the higher levels. In addition project managers must match the project and portfolio finances which are future focused, estimated and inaccurate, crosses fiscal boundaries, with corporate finances which are past focused, demanding structure and accuracy, and set within specific fiscal boundary.
In this webinar session we will review fundamentals and principle of project and portfolio financials and examine the fit with enterprise finance and strategy.
