Why your finance team might cut your project budget?

cut your project budget

“You cut my budget, again.”

My project won’t deliver benefits until next year, why is it expected this year?”

Or a personal favourite:

“We’re agile, we don’t need to track finances.”

Can project managers and product owners be blamed for this attitude or perception towards their accounting or finance colleagues?

In simple terms, no. The onus and miscommunication lies with both parties.

There’s your average highly qualified accountant who has trudged through 3 years at uni, followed with another 2 years of post-grad qualifications to become a CPA, CA or another acronym. However, after 5 years, there is a realisation that project finance is vastly different to the business-as-usual activities expected of them to perform.

Whereas project managers are also not expected or taught how to deliver their numbers in a manner that sells their project with accurate financials. In other words, the concentration is usually only on the cash implications of their projects, often leaving behind a trail of failed/successful deliverables with poor P&L implications for years to come.

This disconnect has created an interesting niche, as large organisations have started investing heavily in the hybrid role of “Project Accountants”. These roles have existed for years in the engineering, construction and government spheres, where projects are part of core business. Now, financial services, technology and legal industries have started catching up.

How is a project accountant different to your usual accountant or commercial manager?

The project accountant requires the knowledge of management and financial accounting. They require an understanding of the complexities of cross-functional involvement, as well as, project delivery frameworks and methodologies used by the business. Within a project delivery framework, the project accountant plays a dual role of:

  • Gatekeeper reporting into the business the true and fair view of how the project is tracking financially; and
  • Advisor advising the project team as to the financial treatment and implications of the various decisions being made, their impact on both the project and the business.

The key benefit of this is the project accountant ultimately plays a Translator role between the project and other finance /accounting functions.

If you have encountered the above issues, you may be interested to know that there is a simple solution – uplifting your skills. Whether you are a project manager or product owner ready to rip your hair out over finance doing its own thing; or a management or financial accountant fed up with misunderstanding of project language; there is a way of understanding each other. We will be running a series of complimentary workshops to drive change and empower the project industry.