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Finance In Project Management

StarAgilecalenderOctober 13, 2022book15 minseyes2095

Introduction

The role of a project manager is very crucial. They have to undertake several responsibilities like managing the team, handling the projects, distributing the tasks within the team, delivering the project timely and managing the finance in project management. So, for the efficient delivery of the project, the project manager should understand the budget allocated for the project. An experienced project manager would complete the project within the budget and would deliver profits to the company.

Professionals planning to get into the role of project management should understand the role of finance and be capable enough to use the resources. A skilled project manager who has undergone online PMP training would contribute a considerable amount of difference in handling financial projects and deliver an efficient and high level of productivity.

This article will discuss the role of a project manager in the financial segment of the project.

Role of finance in project management

An experienced project manager plays different roles while handling projects. Handling the financial side of the project plays an important role and it is the project manager's responsibility to allot budgets accordingly to the projects. When the project manager does not properly handle a project's financial side, the project cost goes outbound. The project cost is always attached to the man hours and time allocated. If the project is not completed within the timeline, the team members have to allot more time leading to extra resource use. So, that would be taken from the profits and lead to less profit in a certain project. So, organisations are always looking for experienced project managers with online PMP training to help them deliver projects on time. Even clients trust companies that provide project managers with online PMP training for their projects.

Skills required to handle finances in a project

A project manager has several skills that make them stand out from others. The skills required by a project manager to handle finances in project management are as follows.

  • Knowledge about financial analysis - A project manager with detailed knowledge of financial analysis would be a cut above from other project managers who don't. Regarding financing in project management, the project manager should allocate the right budget for the project implementation. They should understand how much budget should be used in the sub-tasks to complete the project timely. The knowledge about finance would create a huge demand for project managers. The financial analysis provided by the project manager would help the organisation take future decisions about the organisation. 
  • Communication skills - An experienced project manager should have excellent communication skills that would help them communicate with team members, executives, and clients to justify the financial transactions used in the project and people in different departments, like investors, bankers, and vendors for financial analysis. Along with in-depth knowledge of finance, the project manager should be able to justify the financial transactions in the project. So, having strong interpersonal skills is extremely important. Interpersonal skills will help the project manager work on cost-saving while providing efficient projects on time.
  • Working with the team - An experienced project manager has to work with their team and people from different teams because of the involvement of accounting, sales and different project-related activities. While working with team members and people from different teams, the project manager has to take care of the cost. The project manager has to bring all the members associated with the project on the same page so that all the members understand the project and deliver their tasks properly and on time. When managing the team is taken care of, the projects can be delivered timely.
  • Attention to the details - The project manager should be very careful while providing the financial analysis. If there is a financial error, it may affect the profit numbers for the project.

Role of a project manager in finance

Apart from handling the entire project, the project manager has a special role in handling the finance in project management. Let's look at the financial roles of a project manager.

  • Financial planning - Financial planning in project management includes preparing and supervising the project's expenditure, revenues, cash flows and long-term investments. The project manager should provide a cost-benefit analysis for all the projects to justify the finances in project management. 
  • Scheduling and organising - The project manager has the critical task of scheduling and handling project timelines. Scheduling and organising the tasks with the team members allocating the required budget for every task and team member for smooth running and timely delivery of the project.
  • Management of budgets - The project managers are skilled in budgeting and financial management for the project. This helps the organisation deliver the project on time without being over budget. An experienced project manager takes care of the expenditures and revenues incurred in the projects as well as takes well-defined decisions that would save money on the project and give profits.
  • Improvement in efficiency - The project managers are continuously looking to improve the team's efficiency for the projects. This includes providing different types of cost-saving opportunities at the corporate level. They work on the areas of improvement and provide solutions to avoid project delays, thus helping the organisation deliver projects on time without affecting their cash flow goals.
  • Team Leadership - Managing the team is very important among all the roles played by a project manager. The project managers have to work with different teams, motivate their team members and manage the timely delivery of projects. When working with different teams and many members are involved, the budget can overshoot, leading to a loss in the project. So, the project manager has to be extra careful while aligning with different teams by not crossing the allowed budgets. This reflects the experience of a project manager in handling finance in project management.

How finance plays an important role in project management?

There are several responsibilities of a project manager. Let's look at the critical responsibility of a project manager involving financial analysis in project management. 

  • The role of finance in project management is critical as every project has to be planned according to the allocated budget. If the project crosses the allotted budget, the organisation suffers from excessive cash outflow for the project. All projects have defined objectives and the project manager plans to meet all the objectives while not crossing the budget. The project manager should have detailed financial skills to allocate budgets smartly, forecast costs and revenues as well as optimise the costs to deliver the project on time within the allotted budget. 
  • The project manager handling the finances in project management has the skill set to analyse the financial stability, economic viability and profitability of projects. This provides the project manager with the equipment to predict the project's success and the return on investment on a certain project. With the projection provided by the project manager, the organisation can plan for future expansions and bring new projects. The organisation is better positioned with better financial projections and efficient cost-saving project delivery.
  • The project manager has to continuously monitor the budgets ensuring the project is completed and delivered on time without going overboard. The project manager should have the skill sets to manage the cashflows, managing PL accounts and balance sheets. This would help them in managing and monitor the project efficiently.

 

Training required for handling finance in project management

The PMP training provides the required skill set to handle projects efficiently. The training gives the professional the experience to manage the budgets of a project efficiently. PMI recognises several institutes to provide the training. The online PMP training from StarAgile provides the required skill sets to handle the finances of projects. The professional can check with the team from StarAgile regarding the certification and enrol as per their professional requirements.

Conclusion

The role of a project manager is very critical for an organisation. The project manager can do wonders for the organisation with the right amount of experience and proper online PMP training. From handling the team to managing the projects to providing financial analysis for a project, the project manager dons several hats. For a project to be profitable, the role of finance in project management is essential.  

 

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