Simple Techniques for Managing Project Finances
In my opinion there are 2 key skills that make a rock star project manager; managing and understanding your stakeholders, & project finances. Due to some of my current time constraints, I am going to first tackle project finances.
A project manager that can speak and understand finance is invaluable to most program managers and companies. In my experiences, I have used some simple techniques in order to assist me in this task for my projects. First, a former mentor recommended I review financial terms I did not understand at www.investopedia.com . What a great site. It continues to be one of my most used bookmarks. Second was to develop an understanding of the ways MS project can help a project manager better manage the costs of a project. The remainder of this entry deals with some simple techniques to assist a Project Manager in differentiating capital and operating expenses within a project.
First you will need to customize a field in MS Project.
- Go to tools>>Customize>>Fields
- Select the rename option for any of the text fields.
- Rename the field to “Expense Type”
- Select the lookup option and type in 2 values, one for capital and one for operating
- Click OK to save the custom field.
Now you need to setup the Gantt chart in order to assign an “Expense type” to your tasks. This will enable you to perform grouping, filtering, and rollups to gain an understanding of the breakout of your finances.
On the Gantt chart add a few fields. Add the field for “Cost”, and “Expense Type”. (You can create your own table for this if you would like…) You can rearrange these fields as you like, however I like to leave them to the far left in order to do the next steps.
Now, load your schedule with your WBS, and on each task in the schedule assign an “Expense type”. Your schedule might begin to look something like this:
Once you have completed loading the schedule, you need some groupings to sum the expenses. Setup a custom group for Expense Type (Project>>Group>>Customize Group By). Once this custom group is setup you can group by expense type on both the Gannt chart table and the task usage table to begin to gain an understanding of how your finances are looking during the planning and execution of your project. See the screen shots for what you can expect.
You can even begin to track the forecasted expenses over time by using the task usage screen. Simply insert your custom field for expense type, then group by that custom field. You can forecast and track actuals on this screen per your expense type. This can become very powerful. See my example below:
There are many, many more things you can do in project in order to assist in the financial management of your projects, hopefully this techniques inspires you to customize your own.
