You're managing a critical project for your organization, you've gone through all the financial hoops when half-way through the project it is delayed a few months because other initiatives needed to continue are not complete. No harm, no foul, right? Stopping a project releases the resources so the 'cost' is suspended until the project starts again. In a publicly traded company, this is NOT true. Learn basic corporate finance and understand why stalled projects can directly impact the stock price of a large corporation and it's borrowing power. This explains you're sponsor's red face, doesn't it?

1. RU S SE L L M A RT I N
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RU S SE L L M A RT I N
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Projects and the
Stock Market
“A billion here and a billion there,
and pretty soon you're talking real
money.” - Everett Dirksen
Presented by Lou Russell,
Russell Martin & Associates
www.russellmartin.com
@nolecture 317.475.9311

2. RU S SE L L M A RT I N
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RU S SE L L M A RT I N
A S S O C I A T E S&
• Basic Financials for PMs
• Prediction is a Guess
• Delays Aren’t Free
PM2 - 2
Agenda

3. RU S SE L L M A RT I N
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PM2 - 3
Different Kinds of Costs:
Assets and Expenses
consumableinvestment
PROFIT = Revenue - Expense

4. RU S SE L L M A RT I N
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PM2 - 4
Assets and Expenses
New Development
= investment
(depreciated)
Maintenance =
expense

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Stock Prices impact…
• Perceived worth of the company
• Investment options available to the company
• Credit Line interest rate
• Bonuses for Executives

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Predictions Are a Guess:
The Capital Plan
0
10
20
30
40
50
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
PM2 - 6
Business Strategy
BUSINESS OBJECTIVES: To meet our
business strategies, our publically traded
company will INVEST in the following:
• Ramp up new product offerings
• Improve call center efficiencies
• … your project?

7. RU S SE L L M A RT I N
A S S O C I A T E S&
RU S SE L L M A RT I N
A S S O C I A T E S&
You are managing a new product development project. You will be
‘building the new products’ by solving as many Tripletts as possible.
Here’s how you solve the puzzle: find the ONE WORD that can be
used before or after each of the three provided words to make a
common word.
An example:
TRIPLETT: pack, feed, yard SOLUTION:
Predict how many you will solve after 1 minute and after 2 minutes
by typing two numbers in the chat window like this:
3 4 (totals 7)
PMX - 7
Predicting Revenue

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1. SMOKE - COMPUTER – PLAY
2. GUN - SLOT – TIME
3. BURGLAR - CLOCK – FIRE
4. WEED - WASH – TIME
5. CRIER - DOWN - GHOST
6. PAN - MIX – CHEESE
7. HERRING - CROSS – TAPE
8. EVIL - GLASSES – WITNESS
9. ORANGE - INSURANCE – SECRET
10. BABY - SHOW – DOUBLE
11. TREASURE - BARRIER – EASTER
12. ACTIVE - MAIL – BOX
13. BODY - CHANNEL - MUFFIN
14. LEADER - WESTERN – LABOR
15. DOUGH - CHEST – CRACKER
16. ROADS - DOUBLE – STITCH
17. PUBLIC - SECOND – POLL
18. TAG - DROPPING – MAIDEN
19. DEATH - FORGE – GIRL
20. MAIL - AMERICAN – LANE
21. SILENT - MARE – CLUB
22. FREE - MAGAZINE – CAPSULE
23. RED - BOTTLE – BLOT
24. NUMBER - JOB – COUPLE
25. BAD - LETTER – LEAK
26. FIRE - WRESTLING – CHAIR
27. BASKET - DETERGENT - DIRTYPMX - 8
Tripletts

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PM2 - 9
Public Business Strategy

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Public Business Strategy
Projects (with due dates)

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A S S O C I A T E S&
PM2 - 11
Project Revenue – Project Cost) =
(Earnings Per Share) EPS/ Stock Price
1/4ly Profit
Public Business Strategy
Projects (with due dates)

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RU S SE L L M A RT I N
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Delays Aren’t Free

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You have been assigned to be the project manager of a
planned 9 month capital project that was scheduled to begin
in March, but has been delayed three months. No one on the
team has accumulated labor yet for this project. You and the
team will now begin accumulating labor beginning 6/1.
What could be the financial impact on the company with the
delay?
PMX - 13
The Financial Impact of Change

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Revenue
predictions
by Quarter
based on
Capital
Projects
(New
Production
Facility)
Delay
of
project
Two
Days
into
next
Quarter
Cost
„waits‟
(does not
increase
or
decrease)
Revenue
projection
is missed
Street
notices:
Stock
price
goes
done
H E double
toothpicks
occurs

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PM2 - 15
Benefits and then Project Costs
BENEFIT (What is the RETURN on the investment?):
• Increased sales
• Increased productivity (lower cost of goods sold)
• Increased quality (higher end products)
• Increased service (higher customer loyalty)
• Avoid fines / litigation (regulatory adherence, compliance)
• Increased brand (market share / stock value)

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Seek first to generate revenue
at the lowest cost.
PM2 - 16
Benefits and then Project Costs
COSTS (INVESTMENT):
IT: Software, hardware and IT People
Non IT: People, marketing, training…

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Potential changes to a project:
$ Additional scope
$ Under-estimated – needs more time
$ Under-budgeted – needs more money
$ Resource contention – understaffed
PM2 - 17
The Financial Impact of Change
When BENEFITS OR COSTS
CHANGE,
the project may no longer be
a good capital investment

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