I’ll open this post with a question: How can you define and identify who is a good project manager?
You might start to think about criteria which will help you to measure who is a good project manager but I believe the answer is much more simple: A good project manager is the one who surround himself with professional people in each one of the important functions – Procurement, safety, inspection and of course finance.
If the project manager got the right people in the right positions, doing their job well, then he rest assured that his project will run smoothly and his interference will be required only in special cases.
By the way, this is true for almost all managerial positions and not just for projects management.
One of the most critical functions for the project’s success is finance. Why finance is so important?
First of all, because by the end of the day the business purpose is to make profits. That why we are all here. And as you all know- profits equals money equals finance.
However, this is just a secondary reason. The main reason is that the finance analysts usually holds knowledge and instruments in economics disciplines which are not accessible for the operations. Finance are able to understand financial aspects and perform calculations which can hardly done without the appropriate education. A great example for that can be taken from a research done by prof. Annamaria Lusardi from Dartmouth College. In her research, done in 2007, Lusardi performed a survey among educated people in the U.S , asking a simple question: “Lets say you have 100 dollars in a saving account. The account earns 10% interest per year. How much would you have in the account in the end of 2 years?”
The answer is of course 121 dollars. Unfortunateley, only 18% of the participants provided correct answer although it was pretty simple question. What about more complex calculations like NPV, ROI, hedging or exchange rate impacts? This illustrate the need for a good finance support which will be able to handle this.
So, how can finance maximize his support for the project manager? I’ll provide 3 tips on that:
1)Take out the headache of finance calculations from your project manager – do it for him. Don’t bother your operations with your calculations, just provide them the bottom line.
2)Make sure your project manager sleeps well at night – by knowing that if something might go wrong from financial perspective, you will be there to give heads up soon enough before it will occur. If finance is able to raise the flag on time, it will provide flexibility to the operations to adjust their strategy to the new situation. Do that in professional way and the project manager will greatly trust you on other aspects as well.
3) Understand your project manager needs – when you truly understand your operation’s needs, first you are able to budget and forecast it in appropriate manner. Second, you are able to influence the decision makers to adjust their needs to the budget restriction by prioritize them.
These tips are just extra to the trivial things required from finance like analytical skills, forecast abilities etc., however they will help you to maximize the support you provide to your project manager.