Financial project management. Financial management of target program projects

Lecture 5. Financial management of the current project

Once the budget and funding have been approved, the next challenge is managing revenues and expenditures and adapting to unforeseen circumstances and unexpected situations that may arise during the project.

1. What can you foresee before starting the project?

The more carefully you think through all the points at the beginning, the less likely there will be unpleasant surprises in the future. These include drafting legally sound contracts with suppliers and a clear plan for the use of all types of project revenues, as well as the ability to achieve the highest level of pre-sales or revenues generated prior to the launch of the project.

1.1. Cost management

The advantage of drafting contracts with clear terms and conditions and fixed prices for the services of suppliers is that you will know in advance the amount of work and the cost of it. That is, instead of variable costs that are budgeted as they occur, you will have the final amount you have to pay for each contract.

One way to control fixed and variable budget elements— use color coding: green to highlight contractual and pre-agreed items, and orange to highlight— cost areas where changes are possible, for example, travel, accommodation, meals.

For those elements that are included in the budget, the indicated amount of expenses will be the maximum. Your task now— monitor expenses as they arise, and ensure that this amount is not exceeded. To do this, you need to organize the work so that people involved in the project submit reports on expenses (Template 4 - expenses claim form) accompanied by receipts and invoices. You need receipts as proof that the expenses really were. Both your colleagues and the donor may request them as a cost justification. For EU funded projects, there are established templates that must be used. According to the documents drawn up on their basis, auditors will be able to track the entire history of financial transactions. There may also be rules and regulations regarding what is “eligible” costs. For example, “Can the grant money be spent on alcohol during dinner? Can I state the amount of tips left to the waiter? " Usually the organization or the donor already has formulated standard requirements. You need to familiarize yourself with them and inform your colleagues who spend money and then plan to claim them for reimbursement from the budget!

Who finally approves reimbursement of expenses? One person should be responsible for approving invoices and payments. At the corporate level, this could be you, as the project manager, or the head of the finance department. Most likely, your organization has already established this mechanism and you just need to double-check everything and start using it.

Another helpful tip— ask suppliers who are involved in other projects in addition to your project to indicate on their invoices which project it was billed for (or, if necessary, provide a separate line for your project). In addition to the costs of your project, you do not want to pay costs for others, do you?

Thus, you must develop a mechanism that allows you to:

Set the maximum allowable cost level for each expenditure part, and determine the results of the work for which funds are provided in this budget line (this information can be taken from the budget).

Check that all planned expenditures and outputs are consistent with financial transactions for contracts signed early in the project and variable cost accounts expected during project implementation.

For variable expenses such as travel, living expenses, travel expenses, take care of receiving and approving an expense sheet in advance before the finance department disburses money on it. This saves you from unexpected or inconsistent costs.

Be aware of the deadline for submitting variable cost data at the end of the month— because you don't want a situation where a team member hasn't provided cost data for several months and you think you have some unspent funds. You redistribute them for other needs, and then suddenly it turns out that there are still outstanding expense bills.

Adhere to the established conditions regarding the maximum allowable expenses for hotel accommodation, dining in restaurants, etc.

When implementing the project, you will need to check whether the projected costs are the same as the actual ones. That is why you had to develop not only a budget, but also a financial flow.

The question is, how often should the cash flow be updated in order to timely make changes to the projected costs based on actual spending, and, in general, have an idea of the real state of affairs? For long-term projects with planned and few measures, the financial flow will be sufficient to update once a month. If the project is in the middle of a period of saturated activity, then the update of the financial flow can be carried out weekly or every two weeks.

In Template 1 - budget and cashflowon the sheet with the financial flow, a column is provided for entering into it the amount of the difference between the projected and actual expenses. It will allow you to see whether you are underspending or overspending on each line. For example, if you planned to spend £ 200 on insurance in January, and at the end of January you find that the bill has not been paid, then the actual expenses in January— £ 0. But you will also need to adjust the cash flow, taking into account the fact that these 200 pounds will be carried over to February when this invoice is paid. In this case, it just changed the month you incurred expenses, and the total difference would be 0, because you simply moved expenses from January to February.

For example, if you were planning to spend £ 500 on hotel stays in January, and when you see that the actual costs were only £ 471 on reimbursement claims from your project team members, then the difference column would be show that you saved £ 29 in January. Thus, you have completed all the planned activities and spent less money.— bravo, great cost savings!

To facilitate the process of tracking expenses, you can enter all the transactions for your project into the financial accounting system that exists in your organization. If you work for a large organization, your CFO can arrange for this job. If you are working in a small organization, you may want to talk with your director about what is the best financial tracking mechanism for a project, and if the accounting software available in the enterprise is suitable for this purpose. Most online accounting systems, such as www. mycake. org (which is designed specifically for small creative companies) have this feature by default.

1.2. Tracking and increasing project revenues to maximum indicators

Most creative people find it more difficult to predict the exact income of a project than to plan for it. In fact, this is a completely different skill that is needed for those looking to work on large projects and take leadership positions.

But don't despair. One of the most popular phrases about marketing says: "In marketing, only half of the activities (to increase sales) are effective ... I wonder which one!"

This does not mean that marketing— these are sheer guesses. Not at all! You just need to work with your marketing team / agency / freelancers so that together you can predict and track how marketing costs translate into ticket revenues and other types of project revenues. From this point of view, this online course does not address the issue of the impact of marketing on sales, but this skill is very important and should be mastered either on your own or by consulting a professional in this area.

Although this course does not cover marketing issues, I still recommend tracking the sales of the first days after the start of ticket sales, since your most loyal customers will purchase them first. If they haven't bought your tickets, then either your sales forecasts or your marketing budget should be revisited, as the situation is unlikely to change for the better over time!

1.3. Polite refusal of proposals of a corrupt nature

If you have been working in this area for a long time, then you probably came across situations when you were approached with proposals of a corrupt nature. How to evade them and at the same time continue your project, protecting your budget from adverse influences and retaining the ability to carry out all the planned activities for it?

My proposal may seem too simple (although this is far from the case), but I would recommend that you formalize all obligations for all planned activities in the form of clear and rather strict contracts, and pay bills only for the work performed, stipulated by the contracts, and within the framework of the relevant (agreed ) sums. It is also better to agree in advance on such points as the maximum permissible price per day of stay at the hotel or the monetary rate for food and travel; or establish that you need to fly in economy class, not business class. In addition, you will definitely need to clearly stipulate what the final result should be for each of the contracts with suppliers, and if the subject of such an agreement is a material product (as opposed to contracts on the terms of hiring an employee), then you need to clearly establish the requirements for the level of product quality. that you purchase so that at the end you can compare the received and paid product with these requirements.

However, the good news is that having earned yourself a reputation as a pedantic and incorruptible leader, you will notice that the number of such proposals will decrease significantly. If you accept even insignificant proposals or allow them to be accepted by colleagues in the project you are leading, then, most likely, this will continue, and the scale will only increase.

Thus, you can now:

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Features of financial management of government programs
As already noted, the projects implemented within the framework of state targeted programs are subject to increased requirements in terms of transparency and the ability to control and account for the use of financial resources. These requirements are even more stringent if external investors, such as the World Bank, are attracted to finance the programs.
Each of the authorities that control the implementation of the program (investors, line ministries, etc.) brings its own requirements, standards and guidelines into the rules for the formation, execution and control of the project budget, which should be guided by the executors.
Another important feature of the financing of targeted programs is noted in the work. It consists in the fact that a one-year financing cycle is adopted for targeted programs, while the project budget must be determined for the entire period of its implementation, which corresponds to both the RBB methodology and the World Bank's requirements, and, of course, the project management methodology.
These features have a significant impact on the processes implemented within the framework of target programs, and make us look from a slightly different angle at such basic tasks of project cost management as: formation of the budget for the program as a whole and for individual projects;
financing projects, including accounting for actual costs, receipts, reporting on the status of the cost and financing of the project; analysis and regulation of the cost of projects and the program as a whole, including the conduct of financial audits.
Let us consider the main processes within which the tasks of managing the cost of projects are solved as part of target programs.
Program budgeting
The main objectives of the project budgeting process are: annual determination of funding needs for specific areas of the project and the calculation of planned project costs in the context of specific areas of work, executors and funding sources; formation of a project financing plan, describing the financial flows of the project, indicating the timing of receipt and expenditure of funds; formation of a project chart of accounts, which is the basis for authorizing project costs, cost accounting and financial analysis.
Funding requirements are determined based on an estimate of the cost of the resources required to complete specific tasks, taking into account the timetable. The resources to be planned in the project and taken into account in its budget belong to the following main categories: working time of performers; financial resources; capital goods and production facilities; Equipment and materials.
The financing plan represents the requirements for the investor, detailed by cost items in relation to calendar periods. Based on this data, the funding plan sets the level of monthly (quarterly) program expenditures and the corresponding level of funding required for the implementation of all projects in its composition.

The chart of accounts of projects allows not only to formalize the procedures for accounting for project costs and harmonize them with the requirements of accounting and reporting, but also to define centers of responsibility for specific types of costs within the project.
It is necessary to distinguish three stages of budget formation: The preliminary budget is formed at the pre-contract stage for holding a competition or tender at the choice of the contractor. The framework budget is formed at the stage of concluding a contract and determines the entire volume of project financing. The annual budget is formed for each year of the project and determines the amount of funding for the planned year within the framework contract.
The basis for financial planning is the project plan and contractors' applications for financing the work in the planned year.
The preliminary project budget is formed in accordance with the requirements of the World Bank or other investor and determines all the main cost components by type of activity (see Table 6.6).
The framework budget of the project is formed in the form of cost estimates as an attachment to the price agreement protocol. The set of documents that determine the structure of the project budget may vary depending on industry requirements. For example, in accordance with the requirements and methodological recommendations of the Ministry of Economic Development and Trade of Russia, it includes: a price agreement protocol; cost estimate (see table 6.7); breakdown of costs under the item "Materials"; breakdown of expenses under the item "Special equipment"; deciphering the costs under the items "Basic wages", "Additional wages", "Social contributions"; breakdown of expenses under the item "Travel expenses"; certificate on the amount of overhead costs to the price structure; breakdown of costs under the item "Other direct costs"; breakdown of costs under the item "Costs for work performed by third-party organizations and enterprises" (the structure is similar to the cost estimate) (see Table 6.7).

Table 6.6. Project budget structure

Component prices	Price breakdown	Types of dey	telns 3 "	i - - Only 4!
Salary	Main state
	Local staff
	Consultants
	Total
Reimbursable costs	International flights
	Miscellaneous transportation costs
	Daily allowance
	Local transportation costs
	Rent of premises, housing, office services
	Total
Different costs	Communication costs
	Drawing up, copying of reports
	/> Equipment: cars, computers, etc.
	Software
	Total
Total

The annual project budget is formed in the form of an estimate of expenditures, similar to the estimate of the framework budget, with a breakdown of expenditures by quarter and month.
Financial analysis of the project
The purpose of the project financial analysis process is to control the implementation of the work plan and project financing to solve the following tasks: comparing costs with the envisaged budget and determining deviations from the budget; taking the necessary corrective measures when deviating from the budget.
Cost accounting is carried out on an ongoing basis both at the level of individual tasks and at higher project levels, including

Table 6.7. Costings

№	Name of expense items	Amount, thousand rubles
1	Materials (edit)
2	Special equipment (only for projects funded under the item "R&D")
3	Basic salary
4	Social contributions
5	Software (only for projects financed under the item "Other needs" or "Investments")
6	Overheads
7	Travel expenses
8	other expenses
Total
VAT (only for projects financed under the item "Other needs" or "Investments")
Total with VAT (only for projects financed under the item "Other needs" or "Investments")

at the project level as a whole. It is necessary to take into account the following types of costs: real direct costs (labor, materials, etc.) incurred in the current period; deferred expenses that have not yet been reflected in the accounting documentation, but the need for which has already been identified; "Late" expenses, which include the costs of previous periods, for one reason or another (administrative errors, late submission of invoices, etc.) that fell on the current calendar period.
For financial analysis, information about the planned and actual states of the project and the project budget is used.
The result of the financial analysis process is the Report on the financial analysis of the project, containing the following sections: the main financial indicators of the project (such indicators can be, for example, well-known indicators of earned value);
necessary corrective actions, the adoption of which is in the competence of the project manager; proposed changes to the budget to be submitted to higher authorities.
Financial audit of the project
The purpose of this process is to verify that the project complies with the procedures and rules for financing project contracts.
The main tasks of the process are: verification of financial statements and payment and settlement documents related to the project; confirmation of the reliability of the data contained in the reports and other documents of the project, identification of the facts of violation of the accounting procedure; verification of compliance with legal requirements when performing financial and business transactions during the implementation of the project.
The financial audit of the project is carried out with the involvement of an auditing company, selected by agreement with the investor's representative.
During the financial audit of the project, the following are studied: documents related to the financing of project contracts; accounting documents.
The result of this process is the project audit report. Financial audits should be carried out annually and at the end of the project.
Financial report for Investor
The purpose of this process is to provide financial statements for the project to the Investor.
The report should reflect the project costs at the project level as a whole and at intermediate levels of the work structure (project stages) and the ratio of real and budgeted costs.
The report should include the following information: information about the work performed and the projected amount of work;
actually spent financial resources and projected payments by type of costs; receipts and payments by sources of funds; comparison of planned and projected payments and receipts.
The report should also include projected deferred expenses not yet reflected in the accounting documents.
The initial data for this process are indicators of primary financial documents and information on labor costs associated with the implementation of project work. The result of this process is a quarterly (frequency may vary for different projects) report for the Investor.
An example of the structure of a financial statement is shown in table 6.8.
Table 6.8. Project financial report form

FINANCIAL REPORT OF THE PROJECT
Name of the executing organization				Project manager: full name, e-mail
				Compiled by: DD.MM.YY
name of the project Project progress report with DD.MM.YY. by DD.MM.YY General description of the state of the project In this section, the project manager should provide an overall assessment of the project. 1. Execution of project stages
Stages	Sturg (flame / fact)	The finish (plan fact)	Current condition			Responsible		Cause deviations
Stage 1
Stage...
2. Execution of the budget of the project stages
Stages	Project chart of accounts		Plan		Fact		Forecast	Plan / Forecast
Stage 1	Materials (edit)
	Special equipment
	Basic salary
	Deductions for social needs
	Software
	Overheads
	Travel expenses
	other expenses
	Total Payments
	Total Receipts
	Receipts - Payments				-

colspan = "2">
Project chart of accounts

Stage...	Materials (edit)
	Special equipment
	Basic salary
	Deductions for social needs
	Software
	Overheads
	Travel expenses
	other expenses
	Total Payments Total Receipts Receipts - Payments		". ¦¦¦" L:			-
3. Execution of the project budget
Stages	Plan	Fact	Forecast	Plan / Forecast
Materials (edit)		Stage 1
		Stage...
		Total:
Special equipment		Stage 1
		Stage...
		Total; "- ¦ V
Basic salary		Stage 1
		Stage...
		Total:
Deductions for social needs		Stage 1
		Stage...
		, Total: .¦
Software		Stage 1
		Stage...
		Total:
Overheads		Stage 1
		Stage...
		Total:
Travel expenses		Stage 1
		Stage...
		Total: - ¦
other expenses		Stage 1
		Stage...
		Total:;	. .		¦ ~
Total Payments - -_- Total Receipts "¦" " "" ¦¦ ¦: ¦¦¦¦¦ "Receipts - Payments		Stage 1 -				‘
			-	.		-
		": Stage 1" --¦ - Sr Stage 1	, V - : : :: / V	-	-- -	- ---,----

Literature Scott G. Result-based management and public / private partnership // Mezhdunar. symposium “Project Management: Business. Ideas. Practice ", St. Petersburg, May 17-18, 2005 Ekluf J.A. Project Management in large socio ethical reform programs (with examples from swedish experience) // Mezhdunar. symposium “Project Management: Business. Ideas. Practice ", St. Petersburg, May 17-18, 2005 Samoshchenkov S., Soshnin A., Tsipes G. Programs and projects in government bodies // Coll. Proceedings of the IV All-Russia. practical conf. "Standards in projects of modern information systems", Moscow, April 21-22, 2004. M .: FOSTAS, 2004. Result-oriented budgeting: goals and principles. Eco-rice-NEI. 2002.16 p. (www.nei.ru) Result-Based Budgeting: International Experience and Possibilities of Application in Russia. Center for Fiscal Policy, 2002.59 p. (www.nei.ru) Poznyakov V, Project management in international organizations operating in Russia // Project management. 2005. No. 3 (3). Soshnin A. Application of project management methods in the preparation and implementation of federal target programs // Mezhdunar. symposium “Project Management: Business. Ideas. Practice ", St. Petersburg, May 17-18, 2005. Requirements and guidelines for organizations executing government contracts under the Federal Target Program" Electronic Russia (2002-2010) ". Economy min. development and trade of the Russian Federation, May 31, 2004. Archibald R. Management of high-tech projects. M .: DMK Press, 2002. Tovb A., Tsipes G. Project management: standards, methods, experience. M .: JSC "Olymp-Business", 2003.

30. Project cost and financing management

Key definition

Project cost and financing management(Project Cost and Finance Management)-section of project management, including the processes necessary for the formation and control of the implementation of the approved project budget. Consists of resource planning, cost estimation, budgeting and cost control.

Body of knowledge

The project cost and financing management process includes:

□ Development of the concept of cost management and project financing:

Development of a strategy for managing the cost and finances of the project (defining goals and
tasks, criteria for success and failure, limitations (74 assumptions);

Economic analysis and project justification (marketing,
estimation of cost and sources of financing, forecast of implementation);

General economic assessment of the project;

Development of an enlarged financing schedule;

Determining the requirements for the cost and financing management system in
project;

Approval of the concept.

□ Project cost and financing planning:

Planning resources and determining how many resources will be needed for a successful
project execution;

Estimation of the project cost (based on the developed estimate documentation,
expert assessments, etc.);

Formation of the project budget,

Development of a financing plan that should correspond to the formed
project budget:

Development of a cost and financing management plan for the project.

□ Organization and control of project implementation at cost:

Allocation of functional duties and responsibilities in accordance with
cost and financing management plan for the project;

Implementation of the project cost and financing management system;

Accounting for actual costs in the project;

Formation of reporting on the status of the cost and financing of the project.

□ Analysis of the state and regulation of the cost of creating a project:

Ongoing audit of the project status in terms of cost and finance;

Determination of the degree of project completion by cost indicators
(carried out based on the analysis of actual costs and estimated cost
executed works);

CHAPTER 1. KNOWLEDGE AND EXPERIENCE

Analysis of deviations of the cost of work performed from the estimate and budget:

Analysis of various factors affecting positive and negative deviations;

Preparation and analysis of corrective actions;

Predicting the status of the project work execution by cost;

Making decisions on regulatory actions to bring the work to be performed
the project at a cost in accordance with the budget.

□ Completion of project management by cost and finance:

Economic analysis and evaluation of results;

resolution of claims and conflicts;

Preparation of executive estimates and financial statements;

Final settlement and closing of financing;

Formation of the archive.

Main literature

Voropaev V.I., Galperina Z.M., Razu M.L., Sekletova G.I., Yakutia Yu.V. etc. Management of programs and projects / Edited by Razu ML. Module 8. In the 17-module program for managers "Management of the development of the organization." - M .: Infra-M, 1999. - S. 392.

Voropaev V.I. Project management in Russia. - M .: Alane, 1995 .-- S.225.

Mazur I.I., Shapiro V.D. and others. Project Management: A Reference Guide / Edited by II. Mazur and V.D. Shapiro. - M .: Higher school, 2001. - P.875.

Ilyin N.I., Lukmanova I.G. and other project management. - SPb .: DvaTrI, 1996. - P.610.

Lobanova E.N., Limitovsky M.A. Financial management. Module 14. In the 17-module program for managers "Management of the development of the organization." -M .: Infra-M, 1999.

Guide to the world of project management / Per. from English - Yekaterinburg: USTU, 1998 .-- P. 192.

Archibald R.D., Managing High-Technology Programs and Projects. 2nd ed. -New York, NY: John Wiley & Sons, 1992.

Cleland D.I., King W.R., Project Management Handbook. 2nd ed. - New York, NY: Van Nostrand Reinhold, 1988.

ICB - IPMA Competence Baseline. Version 2.0. IPMA Editorial Committee: Caupin G., Knopfel H., Morris P., Motzel E., Pannenbacker O .. - Bremen: Eigenverlag, 1999. - p.l 12.

Ireland L.R., Quality Management for Project & Programs. - Drexel Hill, PA: PMI, 1991.

Kerzner H., Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 6 th ed. - New York, NY: John Wiley & Sons Inc., 1997.-p. 1200.

Projectmanagement - Fachmann. - Eschbom: GPM und RRW, 1991. - VI, V2, pp. 1130.

Turner J.R., The Handbook of Project - Based Management: Improving the Processes for Achieving Strategic Objectives. - Maidehead: McGraw - Hill, 1993 .-- p. 540.

Turner J.R., Grude K.V., Thurloway L. - The Project Manager as Change Agent. - Maidehead: Me Graw-Hill, 1996.

additional literature

Holt R.N. Fundamentals of Financial Management. - M .: Delo Ltd., 1995.

Holt R.N., Barnes SAT. Investment planning. - M .: Delo Ltd., 1994.

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The effectiveness of the project management system

The effectiveness of the EMS in a particular company is determined by the combination of costs and benefits that such a system will bring. The three main parameters that optimize the use of project management are time, cost and quality of work. Consequently, in a company that does not use project management methods when introducing innovations, there are most likely three types of losses:
- from delays in the implementation of innovations;
- from exceeding budgets due to poor-quality planning or from erroneous execution of unnecessary actions;
- from poor quality work and the need to rework them.

In monetary terms, it is quite easy to estimate the shortening of the project implementation time using statistics on already implemented projects.

Example 1
The company has a typical task of opening a new store. Previously, it took four months to solve it, and after the start of using the project approach and with strict adherence to deadlines - three. In this case, the company will receive additional profit from the earlier launch of the store. With a profitability of 10% and a planned sales volume in the first month of 500 thousand rubles. additional profit from the reduction of the store launch time by one month will amount to 50 thousand rubles.

The situation is similar with project budgets and work quality. Two mistakes are possible here: underestimation of future costs and direct losses associated with erroneous actions. The average cost of such errors is usually 10-20% of the project budget.

The main qualitative advantages of using EMS within the company include:

a higher degree of control over the selected projects. Each project has a responsible manager, work schedule and budget. The progress of the project, the funds spent on it and the benefits obtained are allocated from the main activities of the company and general reporting, therefore, at any stage of the project, the achieved result is clearly visible;
ranking projects by degree of importance, goals set, expected result, etc. makes it possible to assign strategically important projects priorities in resources, personnel, financing;
optimization of the project schedule allows the most efficient allocation of company resources not only within the project, but also between them. At the same time, one can take into account the availability of resources, project priorities, delivery schedules of raw materials and materials, funding restrictions;
the experience gained during the implementation of individual projects can be used to prevent mistakes in future projects, reduce the time required for planning, choose the best way to implement the project;
clear planning of work, which is necessary in project management, allows you to regulate their quality.

Implementation efficiency

There have been no large-scale assessments of the effectiveness of the use of PMS in Russian companies, since there are few companies that effectively use project management as part of regular management. Studies of a similar level are being conducted in the USA and European countries. One survey, prepared by the US Project Management Institute (PMI), includes data from more than 100 North American companies and project management professionals. The diagram shows the results of a survey on the level of efficiency of using the EMS based on the PMBoK project management methodology of the PMI Institute.

Personal experience
Svein Oge Olsen
Since the introduction of the EMS was gradual in our country, we did not evaluate the alternatives. Nevertheless, the qualitative results of the introduction of project management are obvious: for example, expansion into the regions without formalizing this activity and applying project management methods to it, that is, without a clear separation of powers, structured project implementation schedules, documented standards of business processes and IT support, was would be extremely difficult.

This approach has a number of disadvantages and difficulties. In particular, like any advanced management technique, project management requires additional knowledge and skills of the staff, and leads to the complication of communications. As a result, the cost of training and employee compensation increases.

Place of project activity in the work of the company

The extent to which the EMS is used within a particular organization depends on many factors. For example, if a small company decides to open a new store and management wants to track the effectiveness of this undertaking, there is no need to talk about the need to create a project management system. It is quite possible to restrict oneself to the use of its individual elements, for example, the creation of a working group responsible for solving a specific problem. But if we are talking about the opening of ten stores in different cities (project activity for this company becomes constant, and its scale increases), a more complex structure for managing this process is needed, that is, individual elements of project management should be formed into a system. In addition, the size of the company, the availability of qualified specialists capable of building and maintaining this system, the willingness of the management to change the existing management style, etc. are taken into account.

Rice. 1. Options for the presence of project activities in the company's activities

In fig. 1 in the first case, project management is the main management principle in the company. This situation is typical, for example, for software, consulting, construction companies. The third option applies to companies with established businesses that develop extensively. For them, the introduction of project management will even be harmful, since with the complication of management, it will not bring the benefits that are expected in this case. The second option is the most common, but also the most difficult: projects are carried out along with the main activities of the company. In the future, we will consider just this option for organizing work.

Stages of EMS implementation

The CJS implementation is usually the responsibility of the Development Director as the person overseeing and managing all investment projects. It is he who estimates the scale of the future system, additional needs for specialists, the cost of their maintenance and the effect of implementation.

Stage 1. Changing the organizational structure

At the initial stage, a new subdivision is formed in the company - a project office. Often it starts with one specialist, combining current activities with project management functions (this allows you to optimize salary costs), and then it can smoothly develop into a whole unit, depending on the company's needs in project management.

The functions of the project office include:

maintaining electronic models of projects;
maintaining project archives;
control over the implementation of projects;
consolidation of information on projects;
preparation of teaching materials, standards, instructions;
maintaining databases of characteristics of typical works and their fragments for projects and resource requirements;
training and professional development of employees of other divisions.

At the initial stage of the formation of the system, part of the work to support the project activities can be distributed among the existing specialists. For example, preparation of methodological documents and control of the project budget can be assigned to the planning and economic department, resource management - to the personnel department, etc.

To manage project activities, an investment committee is formed from among the top management and, possibly, shareholders of the company, which usually includes directors for sales, production, security, personnel, IT, less often the general director. The Investment Committee makes decisions on the acceptance, launch and completion of projects and meets on a periodic basis or as questions arise for discussion. The activities of the committee and the status of decisions taken by it are regulated by the relevant regulation.

Operational project management is carried out by the curator and project manager. The authority to change the timeline, budget, scope and boundaries of a project belongs to the top level of management and belongs to the project curator, who is often assigned an appropriate top manager. For example, in a store opening project, the sales director will be the curator. Typically, the project curator is approved by the investment committee. The curator, in turn, appoints the project manager and approves the proposed team composition.

The project manager can be a dedicated manager or project initiator who combines this activity with the main job. The manager prepares project documentation, is responsible for the operational management of the project, ensures the implementation of planned work, prepares proposals for changes in plans, coordinates technical and human resources.

Personal experience
Svein Oge Olsen
Our company does not have a project office as a separate structure, however, the project management process is formalized. For projects within the framework of programs, the degree of formalization is high, for them business processes are prescribed that determine the tasks that must be solved, responsibility for them and for the decision-making process itself, project deadlines, typical business plans, cost rates, required productivity, etc. For individual projects, we try to apply the existing standards as widely as possible, but more carefully evaluate the resources required for the implementation of the project and the ways of its implementation.

When setting up the EMS, it is necessary to resolve the issue of dividing the time of employees between the main and project activities. This is especially important when the volume of work allocated to projects begins to take up a significant portion of the staff's time. There are several options for such a division:

“Buyback” by the project manager of the necessary resources from the functional manager (in the form of a share of the time devoted to the project);
complete reassignment of personnel to the project manager for the period of its implementation or for the time of the need for this personnel;
setting the task that arises in the project, not to a specific performer, but to the head of a functional unit.

The first option is difficult from the point of view of implementation, since it requires the development of schemes for remuneration of employees, but it is also closest to the very idea of project management. The second option may turn out to be ineffective due to the underutilization of employees. Therefore, the third option is most often used, when the overall management structure in the project becomes less mobile, however, there is no double subordination of employees, which usually causes a maximum of problems. The advantages of this method also include the freedom of the functional leader in using the resources of the department to solve the problem.

Stage 2. Development of regulatory documents

In the project management standards of a particular company, it is necessary to very specifically describe: who, when and what should do for the functioning of the EMS. This document should include the following points:

company policy in the field of project management;
classification of projects and criteria for highlighting individual undertakings in a project;
a description of the business process of passing the project in the organization (how the project is started, approved and implemented, and who is responsible for it).

The level of detail of the standard depends on the complexity and number of company projects, as well as the number of employees involved in the process. The company policy in the field of project activities describes the place of project management in the general management of the company. It includes the rules for separating the main activity from the project one and the rules for their interaction, the distribution of responsibility for the project activity, its leaders and performers. So in a separate project can be allocated undertakings with a budget exceeding a certain amount. Another criterion could be the scope of the project. If an undertaking does not require large investments and covers the activities of two divisions of the company, it is not allocated to a separate project, but if it affects three or more divisions, it stands out. An example would be a company restructuring project, automation, implementation of a new incentive system, etc.

Rice. 2. A simplified example of describing the business process of passing the project

Despite the fact that projects are unique endeavors, the classification allows you to use existing developments and statistics for similar projects. Depending on the goals, there are projects for:

assortment development;
development of sales channels;
development of production;
development of support units;
improving the quality of management;
business diversification.

The classification can also be hierarchical (first by the scope of the application, then by the content):

a) marketing:

assortment development;
development of a sales network;
development of promotion methods;
development of logistics;

b) production:

modernization of existing production facilities;
creation of new production sites;
improvement of the production process;

c) providing:

automation of management processes;
reorganization of business processes;
increasing the efficiency of the support units.

For each of the selected types of projects, typical work sequences, resource requirements, time, cost of work, possible problems, etc. should be described. In addition, the principle of appointing a curator and project manager can be described. As projects are implemented in the company, the standard may change.

The next step is to describe the business process of passing the project in the company. An example of a schematic representation of a business process is shown in Fig. 2.

The general structure of a business process can be detailed and complicated, up to the description of individual actions of specific employees.

The decision to create an MSJ means that the company has several simultaneously implemented projects, that is, a portfolio of projects. Most often, projects in the company are carried out in parallel with current activities. The rules for coordinating current and project activities are also prescribed in the standard.

Portfolio management is usually competitive. You can create competition between projects within a portfolio by assigning status and priority to them. For example, the status can take on the following values:

in developing;
to launch;
running;
suspended;
completed;
rejected;
deferred.

A change in the status of a project occurs after its consideration by the investment committee on the basis of the boundary conditions adopted by the company. For example, a project is accepted for execution, the payback period of which is at least three years, the IRR value is at least 25%, etc. them, then the status is “postponed”, if the project was rejected, then it is transferred to the archive with the “rejected” status, and if the project is sent for revision, the status does not change.

In addition to status, projects are assigned a priority. For example, the default priority is three. For projects that are more important from the point of view of the company's strategic goals or higher profitability, the priority is increased to two or one, for others it can be lowered to four or five. In addition, the priority of projects may change during their implementation. This contributes to more efficient work of project managers, encourages them to compete.

Stage 3. Automation

Despite the fact that a huge number of articles are devoted to the choice of a software product for the automation of EMS, in practice one should be guided by the real needs of the company. So for a large construction organization that needs a full accounting of materials, shift work, etc., a professional-level system is needed (Primavera Enterprise, Spider Project). For a smaller company, Microsoft Project and OpenPlan Pro are fine. They have rich opportunities for group work: creating a single pool of resources, access to projects via a web interface, integration with mail and accounting programs. In Russia, there are also systems that implement the functions of budgeting and management accounting for projects and automate document flow (TU "Project Management" based on "1C: Enterprise 8.0"). However, they are not a full-fledged replacement for an automated EMS, since they are not intended to optimize project schedules and manage project resources.

The minimum requirements to be met by an automated project management system (including adapted for this purpose MS Excel) are as follows:

the possibility of decomposition of works, planning their duration and connections between them;
the ability to plan the resources required to complete the work;
optimization of the resulting work schedule with and without regard to resource constraints;
risk assessment of changes in the work schedule;
tracking the execution of the prepared work plan;
preparation of reports based on plans and facts of work.

When introducing an automated system that supports project management, it is required to integrate it with the existing budgeting and management accounting systems in the company. Of course, this leads to additional costs, but in the absence of such integration, the efficiency of the system decreases, since the efficiency of entering actual data on the progress of projects into it decreases.

Changes in financial management

For the CFO, when setting up the MJS, the most important issue will be the description of the procedure for managing the cost and cash flows of the project. The introduction of these procedures implies a change in the existing rules for budgeting and payments. Most often, the totality of the company's projects is allocated to a separate CFI "Investment Activity" or "Project Center". DFS budgets are consolidated into the budget of the entire company, as if it were a separate subdivision. Within the DFS, a complete set of budgets is also maintained for each project.

For example, a company starts a project to modernize a production workshop. It is planned to purchase additional equipment, introduce an additional shift and introduce a quality control system. The project is carried out without stopping the work of the workshop. When calculating the economic benefit from the project, the additional volume of products that this workshop can produce is taken into account.

However, it is problematic to allocate only an additional volume of products to a separate project. Therefore, from the beginning of the project, the entire workshop is transferred from the main activity to the investment one, and the cost of the workshop is estimated as if it were a separate enterprise. For the CFI, which previously belonged to the shop, income is accrued in the amount of the cost of the shop, for the CFI "Investment Activity" - an expense in the amount of the same amount. After the implementation of the project, the reverse operation is performed. At the same time, the amount of added value created by the shop can remain in the Investment Activity Center, or it can be transferred to the original Center of Financial Institutions.

Another example is a project to increase the production capacity of a company, in which the manufactured products are sold through its own sales network. The full effect of the project will be in the profit that the company will receive from the sale of additional products at retail prices. New volumes of products will be sold in the existing distribution network. The task will become even more complicated if the products are sold through newly opened stores, which are also considered investment projects that are at the payback stage. A common mistake in such a situation is the calculation of the payback of a production project for a group of companies as a whole. This does not allow to separate the effect from the opening of new outlets and modernized production.

To take into account the actual effect of the project, you can use the transfer pricing mechanism. In this case, the price at which the production sells products to its own stores is set at the level of the existing wholesale price for similar products. The added value of production is attributed to the investment activities of the company and pays for the project to increase production capacity, and the added value of the distribution network - to the corresponding stores and projects.

During the implementation of projects, part of the work will be delayed, new, previously unplanned work will appear, in addition, the initial estimate of the cost of work may be adjusted. This will lead to the fact that in the new system the results of the usual analysis of planned and actual data will turn out to be unrepresentative; it will be necessary to carry out a factor analysis of deviations in cost and scope of work. Therefore, in addition to the budget execution report, it is necessary to provide for an additional form (work progress report) or combine these two forms.

Example 2
Suppose there are ten jobs planned for a month with a budget of $ 12,000. At the end of the month, it turned out that the utilized budget was 5 thousand US dollars. However, after conducting factor analysis, it turned out that four jobs with a budget of US $ 8K were postponed until next month and a new job at a cost of US $ 300 appeared. It can be seen that for the initially planned work, the budget was 4 thousand US dollars (12 thousand minus 8 thousand), and taking into account the new work, the amount will be 4.3 thousand US dollars. This brought the cost overruns to $ 700. The total budget deviation of USD 7 thousand is decomposed into a cost variance plus USD 0.7 thousand, and a scope of work variance minus USD 7.7 thousand (8 thousand minus 0.3 thousand) ... Another difficulty is that the project schedule is subject to constant adjustments, and this leads to a shift in the timing of payments and payments attributed in the budget to a single month. Therefore, if within the framework of the monthly budget it is still possible to achieve acceptable planning accuracy, then the annual budget will become obsolete in two to three months. In this situation, it is worth considering introducing a rolling budget in the company, revised at regular intervals.

The procedure for resolving unscheduled payments is also changing. In project management, it is not uncommon for unexpected work to occur or the cost of the work rises. When deciding on such a payment, it should be borne in mind how the change will affect the overall budget of the project. It is quite possible that earlier on the project there were savings and the resulting work fits into the approved budget, but this may not be the case. A way to solve this problem is to introduce a budget overshoot limit (for example, 5%), within which overshoots are allowed after they are approved by the project curator. And only if this limit is exceeded, the procedure for revising the project budget at the investment committee is initiated.

The lack of integration of the automated project management system and management and accounting systems can lead to a significant decrease in the efficiency of using the EMS. However, due to the specifics of project management, this task becomes not at all trivial. So, when introducing project management, it is necessary to track the relevance of the existing cost codifier - it may well turn out that for some articles it will be necessary to introduce additional detail.

The project budget is formed by importing data on forthcoming payments into the budgeting system used by the company. When creating a project schedule, it is necessary to immediately assign cost item codes to the work entered into the project management system in order to establish their clear correspondence with budget items. This task, as a rule, falls on the employee of the finance department or the manager of the project office. You can also use a library of ready-made fragments of work with assigned codes, performers and configured relationships. The procedure for loading actual payment data into the automated SPC is somewhat more complex. Problems are possible if payments arise that were not provided for in the original work schedule (that is, not contained in the budget loaded at the beginning of the period into the budgeting system). In this case, information about newly arisen jobs has to be entered manually.

Consultant opinion
Grigory Tsipes, Chief Project Management Consultant at IBS.
The change in the work schedule takes place within the framework of change management in accordance with the general methodology of project management. If a change in the schedule leads to a budget adjustment, it must be agreed with the finance department, and, if necessary, with the investment committee. The possibility of changing the schedule and the corresponding powers of employees should be reflected in the rules of project management in the company. Information about payments in real time is entered in the report on the execution of the project budget, and, if necessary, in the company as a whole. No changes are made to the planned indicators, otherwise the analysis of the actual execution of the budget does not make sense.

Personnel resistance

The biggest challenge in implementing project management, as with any other management change, is staff resistance.

Employees of three management levels can initiate the implementation of such a system: top management of the company, project management specialists or project executors, that is, ordinary employees. In the first case, the implementation takes place on a directive basis and does not experience a deficit in financing. However, the created system may not take into account the needs of the performers and be ineffective. In the second case, the system will be quite functional, but it can turn out to be extremely complex for the performers and require a large amount of data to be entered. In the third case, the system will be easy to use, but most likely will not satisfy the needs of the first two levels. The way out of the situation is to try to take into account the needs of three levels, and all of them should take an active part in the development of the system's methodology. For example, initial planning is done by professionals using scheduling, further actions and details of work are performed by performers, and management receives information from the entire portfolio of projects.

Another reason for resistance is increasing transparency of work, labor productivity, division of responsibility, and a decrease in the company's dependence on specific specialists. If this happens while maintaining the same level of wages, then it will certainly cause dissatisfaction, therefore it is absolutely necessary to create a system of motivation for personnel involved in projects. As a result, there may even be competition among employees for the opportunity to participate in projects.

When implementing project management, competition for resources (monetary, human, etc.) begins between different projects. This problem can be solved only through a clear prioritization of payments both for projects and for current activities. If this is not done, the issues of resource allocation will be decided only at the level of managers and will depend on the degree of their influence on the CFO or CEO.

Implementing project management in a company is itself a project. Therefore, like any other project, it must have clear goals, responsible persons, a work plan and a result. Only in this case can we say that the methods of project management in the company will be in demand.

Consultant opinion
Grigory Tsipes
We see three main ways to overcome staff resistance when implementing a project management system - agitation, coercion and motivation.
Agitation is an explanation to future project managers and staff who will be involved in its implementation, why project management is needed, and what these staff will gain if it is used. Experience shows that the greatest resistance is caused by the formalization of actions, that is, the need to fill out a large number of documents, and the fear of control over activities. Of course, in a situation where the project is being implemented successfully, such formalization may seem like a waste of time. But if the project does not go as planned (which happens not so rarely), it is the observance of the formalities that allows you to save yourself from troubles and unfair accusations (“I warned about this, here is the reference”). And at the same time, the transparency of the project for all interested parties is sharply increasing, the opportunities to “fish in troubled waters” are diminishing.
Stimulation(coercion) implies the creation of such rules and procedures that will not allow the implementation of certain actions in the project without observing certain formal requirements (for example, payment is not made without a corresponding application and a CFO visa).
Motivation should be built on the basis of an objective account of the contribution of each employee to the success of the project. We usually offer to reward employees, not only participating in the project, but also those who serve it (financiers, lawyers) in order to avoid unnecessary delays in decision-making. At the stage of pilot implementation of project management, they receive additional remuneration not even for the success of the project, but simply for agreeing to play by the new rules and implement the project. In the future, the basis for awarding will be the results of the project (including financial), since at this stage it is important not only to make people work in accordance with the MSA, but also to orient them towards success. And we must not forget about the non-material side of motivation. Project managers are in the past ordinary employees who, after the introduction of project management, acquired a new professional status and dramatically increased their market value.

The efficiency of use is understood as the assessment of the EMS by the managers of the companies.