Updated: Nov 21
A day in the life of a project manager is not an easy one. In addition to keeping up with the progress of the project, the PM cannot lose sight of the project’s finances. The great thing is that the project manager doesn't need an MBA in Finance to manage the project budget. This article discusses the top tactics to stay on top of the project budget.
Throughout the current fiscal month, the project manager needs to work with the internal full-time project resources to ensure that they will work the budgeted hours for the following fiscal month. For example, if a software development resource is scheduled to work 70 hours in fiscal August, there needs to be a confirmation there will be no change to this allocation before the project manager submits the Budget Plan at the end of fiscal July.
The project manager needs to also stay on top of resources when they plan to take vacations. Again, this was done during the previous fiscal month to ensure there would be no surprises after the estimates are confirmed for the next fiscal month. This is especially true if the resource is planning to take multiple days off consecutively. If this is the case, the budget plan needs to reflect the associated reduction in hours. If these actions are not taken, the project budget will show a variance between the actuals and estimations. Depending on the organization that you work at, a budget variance of +/- 10% may be excessive and you may find yourself in front of senior management explaining the variance.
The project resources need to book their appropriate time for the projects that they are assigned to in the appropriate fiscal month. As the project resources do this, the project manager must observe the financial dashboards and ensure that the resources are booking to projects appropriately. For example, if a resource is estimated to work 65 hours in August, the project manager ensures that the actuals reflect these estimations. This is a critical step in the Internal Labor estimation process.
If the resources are booking more or fewer hours, the project manager must investigate why. Were they out sick or on vacation? Was the work harder than expected necessitating more hours? Did they overestimate the work? The project manager must have the exact reason for these variances in the event they need to explain to Financial Management or the PMO why allocations did not match monthly actuals.
Project managers must work with the resource managers or functional managers of the project teammates to ensure resource allocations remain intact. Also, the project manager should also check in with management if there are any changes to resource allocations and help facilitate any approvals for those changes. The project manager must work proactively with these managers in order to properly oversee this.
The PMO governance processes surrounding internal resource management may vary from organization to organization. However, the general idea of making sure the project is properly budgeted for eventual spending remains the same. This will help project managers to keep their project finances on track.