Sunday, 10 April 2011 00:00

Project Acrimony: Project Management and Finance

Rate this item

(0 votes)

Picture of accountant

Few events start a project manager's day off worse than a yellow sticky note on his or her monitor saying, "The finance manager would like to talk to you." An email is equally as bad; however, the note at your desk means that someone actually hunted you down looking to talk about, you guessed it, finances. There must be some problem. Everyone knows the finance folks would never wander into project-land to invite you out for a friendly cup of coffee. You quickly review the project's finances. Everything seems in order. With a sigh, you contemplate whether you should walk over and see her or will a phone call be the least painful option? Yes, painful. Anytime the finance manager calls, there is going to be a lot of new work.

Let Project Managers Manage

The fellows in finance never come bearing gifts. I have yet to have a benevolent bean counter walk into my pint-sized cubicle claiming, "You have an extra $50,000 to complete the project." It is usually the quite the opposite. Mumbling arcane accounting argot, they want expenses cut, more reports, recategorization of costs, or the like. More work, with no offer to help.

To help, apply a trick I learned from rescuing projects, request an accounting resource be assigned to the project. Let this person parse the project, dissect the data, and run reports. Bill his or her time directly to the project making sure everyone is aware of the actual cost. This frees up the project manager's time to... well... manage! I have never seen a project go off track because a project manager did not know its earned value. I have seen failures because the project manager was managing the report and not the people. If the reports are of value to the project (a rarity, in my experience), they can be used to develop corrective actions. However, proactive management rarely relies on reports providing details from four or five weeks ago. By the time enough data available to generate a meaningful report, the problem is out of control. Projects cannot be managed by looking in the rearview mirror.

Meeting the Executive's Need

Capital versus expense, earned-value, and other arcane finance topics often poison the relationship between finance and the project. The primary reason is that there is little or no perceived value to the project. In most cases, there is none; they are for project executives. The finance team can best determine capital costs and earn-value calculations. Project executives need to look at each of these requirements, determine their value, who should be generating them, and streamlining processes to remove waste.

When significant financial reporting is required, the best option is to allocate a financial representative with the appropriate expertise to do that work and bill their time to the project. This allows executives to see the actual cost of these functions and requires that they justify the cost. Furthermore, this frees up the project manager's time to manage people rather than a series of reports. The net result is building a cooperative relationship between the project team and finance.

When the Project Manager is at Fault

There are times when the acrimony is an issue only the project manager can solve. Project managers must maintain objectivity. They are simply managing a conduit to provide a product within a given set of constraints—scope, schedule, and budget. If the project's budget needs to be cut or there are simply insufficient funds to accomplish what the customer wants, the project manager needs to push back on the project sponsor. The sponsor must acquire the appropriate funds or trim scope. The project manager and finance representative should be allies in this cause. Too often, the project manager takes on the role of trying to deliver the same functionality at a reduced cost. This approach, sounds accommodating and cooperative, but results in overextended projects that miss their financial and quality goals. The sponsor or customer needs to cut non-essential scope, supply more funds, or cancel the project.

Project Partners

The answer is making friends with finance. Partnering and having them do the esoteric accounting work for compliance and executive reporting. Remove yourself from the ever-changing world of accounting rules and focus on managing the people. For, just when you think you understand the world of GAAP, SEC, and FASB, your company will adopt IFRS and your world will change once again.

Read 44606 times

Tagged under

Related items

Filling Execution Gaps: How Executives and Project Managers Turn Corporate Strategy into Successful Projects

What Filling Execution Gaps Covers

Filling Execution Gaps

by Todd C. Williams
ISBN: 978-1-5015-0640-6
De G Press (DeGruyter), September 2017

Project alignment, executive sponsorship, change management, governance, leadership, and common understanding. These six business issues are topics of daily discussions between executives, middle management, and project managers; they are the pivotal problems plaguing transformational leadership. Any one of these six, when improperly addressed, will hex a project's chances for success. And, they do—daily—destroying the ability companies to turn vision into value.

Check it out on Amazon or the Filling Execution Gaps website

Without the foundation of a common understanding of goals and core concepts, such as value being critical to success, communication stops and projects fail.

Without change management, users fail to adopt project deliverables, value is lost, and projects fail.

Without maintaining alignment between corporate goals and projects, projects miss their value targets and projects fail.

Without an engaged executive sponsor, scope increases, goals drift, chaos reigns, value is lost, and projects fail.

Without enough governance, critical connections are not made, steps are ignored, value is overlooked, and projects fail.

Too much governance slows progress, companies cannot respond to business pressures, value drowns in bureaucracy, and projects fail.

Without strong leadership defining the vision and value, goals are not set, essential relationships do not form, teams do not develop, essential decisions are not made, and projects fail.
Filling Execution Gaps: Building Success-Focused Organizations

Executives define vision, strategy, and goals to advance the business. Projects enable companies to meet those goals. Between strategy and projects, there is a lot of work to be done—work that lays the foundation for project and operational success. Through experience and research, six common gaps exist in organizations that inhibit project success—an absence of common understanding, disengaged executive sponsors, misalignment with goals, poor change management, ineffective governance, and lackluster leadership.
Get Recognized as a Leader: Four Core Leadership Actions

Leaders make decisions. This requires a core set of actions to gather the best information, hear out the concerns of others, and making a decision that everyone will follow—even if there is not unanimous agreement with the decision. Although there are hundreds of actions leaders must take, there are four core actions that all great leaders do—listening, dialog and discussion, selling a vision, and eliminating blame. This session will discuss those actions in a roundtable format that we call a "What Would You Do?" session. In these sessions, the presenter acts as a moderator spending 10 to 15 minutes per topic working with the audience talking about what the action is, how to best do it, and hearing from the group on how they have carried out the action. This brings significant audience interaction, involvement, and broader education.
Build Your Leadership Style: Six Leadership Strategies

Salespeople, Project managers, and business leaders, to name a few, need to change their leadership style for every situation. Situational leadership is more important for these roles than nearly any other role in an organization. Central to this leadership style is commanding the six core strategies—directive, expert, consensus, engaging, coaching, and affiliative. These sets leaders the foundation for building the most appropriate leadership style for the conditions surrounding the current events, people in the room, and external conditions. In this roundtable session, which we refer to as a "What Would You Do?" format, the audience debates the use of each strategy as the presenter poses various conditions and dilemmas that face leaders daily. This creates an educational, interactive and entertaining presentation that builds cohesiveness in your group and relationships that last long after your event.
Kill The White Knight
There is a reason we hesitate to teach classes on fixing failing projects. Many a cynic feels that we simply do not want to teach our trade, however, our reason is far nobler—we should be teaching prevention rather trying to create white knights to save the day. It is the same philosophy as building a fence at the cliff's edge rather than an emergency room at its base. Our language is replete with idioms telling us to look past the symptoms and address problems at their root cause. 'An ounce of prevention versus a pound of cure' or 'a stitch in time saves nine.' Please, feel free to supply your own in the comments. Unfortunately, most of our businesses loathe this philosophy, waiting to address an issue until it is irrefutably broken.