Updated: Sep 13
A day in the life of a project manager is not an easy one. In addition of keeping up with the progress of your project, you cannot lose sight of your project’s finances. The great thing is that you do not need an MBA in Finance to maintain your budget but due diligence. In the past, I leveraged the below project management tactics to stay on top of my budget and hope you will find them helpful.
Toward the end of the current fiscal month, I reached out to my internal full-time project resources to ensure that they will work the budgeted hours for the following fiscal month. For example, if I had a resource scheduled to work 70 hours in fiscal August, I made sure to confirm there will be no change to this allocation before my budget plan was submitted at the end of fiscal July.
I also stayed on top of my teammates when they planned to take vacation. Again, I did this during the previous fiscal month to ensure there would be no surprises after I developed my budget. I found this a critical step especially if the resource took 7 or more days off. If this was the case, I altered the budget plan to reflect the reduction in hours. These actions were important for me because if this is was not taken care of my project showed a variance between the actuals and project budget. Organizations that I worked at generally considered a budget variance of +/- 10% a non-compliance and I found myself in front of senior management explaining the variance.
Another aspect of resource allocation that I was on top of was to make sure that my project resources booked the appropriate time to my projects in the appropriate fiscal month. If they are allocated for 65 hours in August, I stayed on top of this to ensure the actuals reflected this allocation. If resources booked more or less hours, I found out why. Were they out sick or on vacation? Was the work harder than expected necessitating more hours? Did they overestimate the work? It was necessary to have the full story so that I would explain to my Financial management as to why allocations did not match monthly actuals. I never wanted to approach my PMO Financial Management team without an answer if they asked. You can see a video here on how to determine resource cost based on estimated hours.
To ensure that I did not run into issues with resource allocations, I established a good relationship with resource managers to help facilitate communications. This made it easier to work with them on any changes to resource allocations and to help facilitate approvals for those changes. This is one area of project financial management where I feel proactivity is key as certain managers are very tough to reach due to their schedules.
The PMO governance processes surrounding internal resource management may vary from organization to organization. However, the general idea of making sure you are properly budgeted for eventual spend remains the same. Establish good relationships with your project resources as well as their resource managers to communicate with them frequently about their hourly allocations. This will help you to keep your project finances on track.