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Reviewing Financial Data for Project Managers, Module 5


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This module in a series of training modules for project managers on the cost management aspects of managing a project provides insight on how to review financial data during the course of a project. …

This module in a series of training modules for project managers on the cost management aspects of managing a project provides insight on how to review financial data during the course of a project. Use for reporting project status. For more information on our training programs, please contact Floyd Saunders at

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  • Instructor Note: Review contents of slide with participants. Remind them this is a two day course intended to help them become more faimiliar with principles of business financial management in day one and then in day two we turn our attention to developing project budgets and managing the costs of a project. Day One is important for two reasons, which will be explained further as you get into the course materials. But in summary, a sound understanding of business financial management will help them be more effective project managers, as they focus on the revenue generation needed to make your company successful and as they better understand a client ’s financial records, they can focus on proposals that have the most impact for the client’s reveunes as well.
  • Be able to calculate : Planned spending Percent complete Schedule Performance Index Estimate to Completion Estimate at Completion To Complete Performance Index Define UST Global Guidelines for Financial Management
  • Cost management is important to a public IT services company because like any public company, earnings are reported to investors on a quarterly basis. Deliver projects late and over-budget does not look good to investors, management or your clients. Project scope, the time (or schedule) and the quality of the end product are measured in part by the costs of the project against a plan. At frequent points in time you want to be able determine if you are: Under or over budget Ahead or behind schedule Improving or getting deeper in a hole. Need to re-plan.
  • Transcript

    • 1. Review Financial Data Module 5 Saunders Learning Group Andover, KS
    • 2. Workshop Map FinancialManagement Course Financial Overview Decision Making on Projects Project Budgeting Actual Costs & Variance Analysis Reviewing Financial Data Summary And Wrap-up Floyd Saunders, Andover, KS 2
    • 3. Module ObjectivesFloyd Saunders, Andover, KS 3
    • 4. Project Cost Management Definition“The processes involved inplanning, estimating,budgeting, and controlling costsso that the budget can becompleted within the approvedbudget”Floyd Saunders, Andover, KS
    • 5. Why Do We Manage Cost? Part of triple constraint, can’t manage one without the others (scope, time, and quality) Plots of cost and scope against plan can help spot problems early TodayIs this project over/under budget? ActualIs it ahead of/behind schedule? Costs (AC) Planned Value (PV) Cumulative Value Earned Value (EV) Time Floyd Saunders, Andover, KS
    • 6. Cost Control Inputs Tools & Outputs1. Cost Baseline Techniques Cost change control 1. Cost Estimate Updates system 2. Cost Baseline2. ProjectFunding Performance Updates measurement analysis 3. PerformanceRequirements3. Performance Measurements Forecasting 4. ForecastedReports4. Work Performance Project performance CompletionInformation reviews 5. Requested Changes5. Approved Change Project managementRequests 6. Recommended software Corrective Actions6. Project Variance management 7. OrganizationalManagement Plan Process Assets Updates 8. Project Cost Cost Cost Management Estimating Budgeting Control Plan Updates Floyd Saunders, Andover, KS
    • 7. Determining Progress Progress is compared against the baseline to determine whether project is ahead of or behind plan Percent complete can be difficult to measure, some managers use rules 50/50 Rule – Assumed 50% complete when task started, final 50% at completion 20/80 Rule – 20% at start 0/100 Rule – No credit until complete Floyd Saunders, Andover, KS
    • 8. Variance at Completion (VAC) Target Cost & Schedule Schedule Variance (Time) Planned Earned Value (PV) Value (EV)Floyd Saunders, Andover, KS
    • 9. Tricks for Earned ValueSave for PMP Exam Project Current Start Status BAC PV EAC AC ETC Floyd Saunders, Andover, KS
    • 10. Formulas to Estimate Cost to CompleteNAME FORMULA NOTESEstimate to Complete (ETC) EAC-AC How much more do we have to spend?Variance at Completion BAC-EAC At the end of the day, how close will we be to plan?(VAC)Estimate at Completion BAC/CPI Use if no variances from BAC have occurred(EAC) AC+ATC Use when original estimate was bad. Actuals + New estimate AC+BAC-EV Use when current variances are not expected to be there in the future AC+(BAC-EV)/CPI Use when current variances are expected to continue Floyd Saunders, Andover, KS
    • 11. % Completed Actual% Completed Actual The percentage of work which was actually completed by the Reporting Date. This is calculated using the following formula% Completed Actual = AC / EACWhere Saunders, Andover, KS cost and Floyd AC is Actual EAC is estimate to Completion.
    • 12. Schedule Performance Index • An index showing the efficiency of the time utilized on the project. • This is calculated as: SPI = Earned Value (EV) /Planned Value (PV) • The formula gives the efficiency of the project team in utilizing the time allocated for the project. • SPI value above 1 indicates efficiency in utilizing time allocated to the project. • SPI value below 1 indicates less efficiency in utilizing time allocated.PI = BCWP / BCWS (budgeted Cost of Work Performed / Budgeted Cost of Work Scheduled) Floyd Saunders, Andover, KS
    • 13. Estimate to CompleteFloyd Saunders, Andover, KS
    • 14. Estimate at CompletionFloyd Saunders, Andover, KS
    • 15. Practice Exercise  Using the Handout, complete the Workshop Practice Project.  Determine the: P Floyd Saunders, Andover, KS15
    • 16. Reviewing Financial Data – Tools and TechniquesFloyd Saunders, Andover, KS
    • 17. Group Discussion Which of the techniques presented are most likely to help you manage your projects? Which of the techniques will you start with next week when you return to your projects? What else do you need to apply these techniques Floyd Saunders, Andover, KS
    • 18. Module SummaryAs a project manager you should be able to calculate andreport:Floyd Saunders, Andover, KS
    • 19. QuestionsFloyd Saunders, Andover, KS
    • 20. Post Workshop Action Plan Complete the Post Workshop Action Plan Floyd Saunders, Andover, KS 20
    • 21. Service Offerings From Floyd SaundersInnovation Management Innovation Management Innovation Coaching Innovation Promotion & Campaign plans  Creative Thinking – SLG uses a variety of techniques to Innovation Kick Start Programs stimulate your teams in creative thinking, critical to developing Innovation Coaching an innovative mindset Management of Innovation Labs  Guided Facilitation – using techniques learned from contextual Innovation Program Management design, six sigma and agile methods, our coaches guide the development of innovation ideas from concept to market launch  Product Design - Our coaching techniques guide the design Innovation Labs development process with a range of tools and techniques to spur moving innovation forward quickly Independently creates product prototypes and proof of concepts allowing for focused development efforts Reduces time to market for new product development Project Management  Structured use of project management lifecyclesInnovation Kick Start Workshops  Project planning, tracking, controlling and implementation services Designed to spur creative thinking, collaboration and  Project Management Training innovation Increases the organizational awareness of the value of innovation and innovative thinking Program Management Provides a set of skills and tools for managers to deploy as they expand innovative ideas into products ready for market.  Creating and Management of the Project/Program Office Expands the organizational culture to be a team of  PMO Maturity Assessments innovative thinkers.  Project status reporting and metrics programs Spurs Innovation and reduces Time to Market  Project Manager Development Programs Intended to result in creation of new products and  Knowledge Management or services with revenue targets Floyd Saunders, Andover, KS Proprietary, all rights reserved
    • 22. Getting Started Floyd Saunders, Andover, KS Proprietary, all rights reserved
    • 23. Thank you Saunders Learning Group