Do you understand how and why your projects are funded?
If you would like to learn more on the financial side of projects, you may want to consider earning PDUs with finance and accounting training.
If you are in a construction, consulting, or service business, your organization is largely project-oriented, and your projects serve your customer. Projects are, in essence, the output of the business, and project finance and accounting is embedded in the fabric of the organization.
If your organization is production-oriented, projects are not the output of the business, but rather serve the business. Accounting in a production-oriented business aims at monitoring financial progress of organizational elements such as geographical or functional departments, divisions and the enterprise as a whole. Operational funding allows discretionary project funding for managers – typically for “smaller” projects, where “small” is defined by the organization.
Larger projects are typically funded outside the production operations, while there is often funding within the production operations to fund smaller projects. Closely tied to the project portfolio management process is the practice of capital budgeting. Projects are financially justified and also prioritized based on funding available and the strategic needs of the business. Within this framework projects are planned, created, managed, controlled, and completed against success criteria. Formal project accounting techniques such as percentage-of-completion and job cost accounting are used.
Finance and accounting is an important component in your vocabulary – especially if you aspire to upper management. It provides the big picture of where your projects fit into the overall strategic plan of your organization, and also provides the basis for career growth.
John Reiling, PMP
PM Training Online