Project Management Framework
Execution - Financial Management
How to do Financial Management
Managing the finances of a project should begin as soon as the project is initiated. The project manager may be delegated certain aspects of financial management, often those associated with controlling and monitoring project expenses.
Projected project costs should have been identified in the Investment Plan. Resources (both dollars and staffing) officially allocated to cover those costs comprise the project budget. Defining or validating the adequacy of a project budget is an important first step for the project manager.
Financial management involves applying controls that ensure the project stays within the agreed upon budget. Changes in the baseline project budget must be managed through the approved
Change Management process.
For Best Results
- Initiate financial tracking as soon as funding becomes available.
- Baseline the project budget.
- Devise financial control processes that integrate with existing accounting and budget procedures.
- Establish a check and balance system that separates authority for expenditure reporting from authority to purchase/encumber project funds.
- Ensure there is a clear delegation of authority to purchase/encumber project funds.
- Prepare financial status reports according to the agreed upon Status Reporting procedures and provide an appropriate level of detail (see Example).
- Ensure project-specific financial tracking tools and controls meet the requirements of specific funding sources or references such as the following:
- Federal Grant Applications and Approval Documents
- Legislative Proviso funding documents
- Budget Decision Packages
- Decision Papers
- Feasibility Studies
- Staff Studies
- Fiscal Notes
- Contracts
- Make sure that project team members and project stakeholders understand the role and value of the financial management control processes.
- Examine all financial variance as a possible indicator of faulty estimates or processes that may be propagated throughout the plan.
- Keep current with all financial records.
- Maintain thorough and accurate documentation.
- Define milestone acceptance criteria for payments to contractors, if applicable.
- Determine any requirements and processes for release of funds to the project.
Also Consider
- Enlisting the assistance of a financial expert from the accounting or budget unit of the sponsor’s organization.
- Working with project sponsor to address under funding and exploring funding opportunities.
- Establishing mechanisms for cross-biennial financial planning/reporting or other non-standard financial calendars such as those associated with federal grants.
- Establishing a project-specific chart-of-accounts in AFRS to facilitate maintenance of financial records.
Checklists