23 Aug Why Financially-Minded Project Managers Outperform Their Peers
Management is, above all, a practice where art, science, and craft meet. As a leader in professional services, you know all too well the role your Project Managers (PM) play in your business. PM’s wear many hats to make the organization successful. They are planners, and communicators. They are also experts in their particular field, knowing the ins and outs of their industry. PM’s are Leaders of your teams, managing everything from schedules to time tracking. In this guide, we discuss why financially-minded project managers outperform their peers.
PM’s are also:
- Visionaries, helping your customers see the vision and execute on the close
- Organizers, tracking resources, keeping projects on track, or shifting as necessary until projects are completed
- Our front-line financial managers, tracking project costs, and are responsible for achieving project profits.
Through the increased use of technology such as mobile and cloud, today’s PM owns the project management lifecycle end to end. From project execution, staffing, and scheduling, to change management and execution, your PM is key to the organization’s success. Although overall project management is their focus, project financial management – focusing on the project costs and profit -is a part of the PM role that has its own unique set of challenges. Whether doing the initial budget, dealing with customer changes to the project, or onboarding new employees, these challenges all impact your business.
So why does this matter? Because there’s so much at stake financially Delays in the financial management process have ripple effects across projects. Project profitability – from baseline margins to closing down financial periods, needs to stay on track and close to budget. With delays in the financial process, project decision-making is delayed which can further affect project performance As an example, let’s look at a financial metric.
An increase in Days Sales Outstanding (DSO) directly impacts available cash and reduces financial flexibility. This could lead to restrictions on resources, which in turn could impact scheduling and utilization. Having sound financial management, in this case knowing DSO sooner, allows your PM to react faster and take action accordingly. This example is just one of many supported by research.
A recent study by Harvard Business Review shows that poor project financial management- including items like costs, resources, and benefits – can negatively impact project performance by nearly 12%.
