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Budgeting and Costing in Project Management - Reviewing and Reporting

July 14, 2009 | Author: PM Hut | Filed under: Communications Management, Cost Management, Performance Reporting

Budgeting and Costing in Project Management - Reviewing and Reporting (#16 in the Hut Introduction to Project Management)
By JISC infoNet

Reviewing and reporting on the budget is a routine part of Managing Project Boundaries. The Project Manager is likely to have been given a budget and indicative Tolerance Limits. There may also be contingency funds set aside to cover specific risks which may occur.

Financial information is often prepared on an exception-reporting basis with the focus on things which are significantly different to the original budget. When any major discrepancy occurs, the Project Manager is charged with the responsibility to identify why the variance has happened and whether it constitutes a systemic failure. Appropriate corrective action can be agreed and implemented.

Most financial reporting makes no immediate allowance for project tasks and activities being performed early or late. If things are going well and outputs are being delivered early, then the project may be spending money quicker than planned. Conversely, if the project is behind schedule operationally, costs may not have been incurred by the planned dates, so expenditure figures look artificially good. As long as any variance can be explained it is quite normal to review and update the budget at appropriate intervals in order to reflect actual activity.

When the project comes to an end various accounting tasks need to be performed such as making sure that all invoices have been received and paid and any regular charges have been cancelled or transferred to operational budgets (e.g. office costs, insurances etc.). A final check should establish whether all commitments have been discharged and whether there are any unused commitments which can be cancelled. At this point there will need to be agreement about what to do with any underspend or overspend. You may also need to account for the transfer of responsibility/ownership for capital assets and facilities used by the project.

In a minority of cases where the project was set up as a separate legal entity with financial independence from the host organisation, then it may be necessary to formally wind up the business, requiring specialist financial support and advice.

The final report on project activities will include the final accounts and a review of costs and benefits. External funding agencies will often provide templates for reporting purposes, with advice on retention periods for official documents and records.

JISC infoNet aims to be the UK’s leading advisory service for managers in the post-compulsory education sector promoting the effective strategic planning, implementation and management of information and learning technology.

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