Financial Management Process For [Project Name]

Project Financial Management Process

1 Introduction
The Project Financial Management Process is followed after the initial project budget has been documented and approved during the Project Initiation phase of the Project Management Life Cycle

What is a Financial Management Process?

! Financial Management Process is a method by which costs "or e#penses$ incurred on the project are formally identified% approved and paid Typical types of costs include& Labor "e g staff% e#ternal suppliers% contractors and consultants$ '(uipment "e g computers% furniture% building facilities% machinery and vehicles$ Materials "e g stationery% consumables% building materials% water and power$ !dministration "e g legal% insurance% lending and accounting fees$

When to use a Financial Management Process

The Financial Management Process should be initiated after the e#pected Financial '#pense Form has been created and approved during the Planning phase of the project This process provides a mechanism for monitoring and controlling the actual financials of the project against those that were originally planned)budgeted It important to formally trac* e#penses throughout all phases of the project% otherwise% it may become impossible to accurately manage the project constraints of time% budget and (uality

1.1

Instructions

Complete all sections of this form If a particular section is not applicable% enter +! "+ot !pplicable$ to indicate that you have at least considered this section ,nder Contact Information% the -ponsor% !uthori.ed /y% and Contact can be the same or different individuals !ll tables and bo#es are e#pandable information !dd rows when it is necessary to include additional

0efinitions of project management and technology terms are presented in the 1n2line Project Management 3lossary "www.technology.wv.gov .

Project Cost Management Process Template% version 4 5 "56 46 47$

Project Financial Management Process

1.!

"ontact In#ormation
Clic* here to enter a date Clic* here to enter te#t Clic* here to enter te#t Clic* here to enter te#t Clic* here to enter te#t
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-ponsor& !uthori.ed /y88& Contact Phone +o & P!- number&

-ponsoring 'ntity& Contact& Contact 'mail&

1.3 Document History

$ersion [1.0] Issue %ate [Date] "hanges [Section, Page(s) and Text Revised]

1.&

'u(mit )uestions and Financial Management %ocuments to*

wvot.e+mo,wv.gov

Project Cost Management Process Template% version 4 5 "56 46 47$

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Project Financial Management Process

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Project Cost Management Process Template% version 4 5 "56 46 47$

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Project Financial Management Process

1 Project Financial Management Process

1.1 /verview

The purpose of the Financial Management Process is to record actual financials "or e#penses$ which accrue during a projectEs lifecycle Project financials are formally documented through the completion of the Project '#pense Form The following diagram depicts an overview of the Project Financial Management Process% including the roles% processes and procedures to be underta*en in this process

Project Cost Management Process Template% version 4 5 "56 46 47$

Project Financial Management Process

Project Cost Management Process Template% version 4 5 "56 46 47$

Project Financial Management Process

1.!

8udget Planning

/udget Planning involves documenting planned financial project information e#pected to occur during the project To properly develop a sound project budget% the Project Manager and Project -ponsor should outline the *nown project activities that will need to occur and estimate their cost% *eeping in mind time constraints and other dependencies that may impact the cost of the budget !n initial Financial '#pense Form is created and approved by the Project -ponsor

1.6

%ocument 29+enses

!fter the Financial '#pense form is approved and the project is underway% the Project Manager and)or Project !dministrator should begin to trac* all e#penses on a regular% preferably wee*ly basis 0uring this process% the Project Manager must confirm that& The tas*s for which the e#pense occurred are valid "as per the Project Plan$ The e#pense was originally budgeted "as defined in the approved budget$ !ny unbudgeted e#penditure is fair and reasonable before forwarding to the Project -ponsor for approval "if above a certain agreed upon limit$

+ote& The Project Manager may have authority to approve only budgeted e#penditures Unbudgeted e#penditures over a certain limit may re(uire the approval of the Project -ponsor or Project /oard /ased on the above information% the Project Manager will& !pprove the e#pense and process it for payment or 9e(uest further information from the person submitting the e#pense or 0ecline the e#pense and raise an issue with the person submitting the e#pense

Following formal approval of the e#pense by the Project Manager% payment will be scheduled It is typical to pay e#penses in FbatchesG to reduce the administrative wor*load in ma*ing e#pense payments and more effectively manage project cash2flow

1.&

-rac: 29+enses

This process involves updating the Financial '#pense Form and Project Plan with relevant information and notifying the Project -ponsor of any budget vs actual e#pense e#ceptions The following procedures are underta*en& 0+date Financial 29+ense Form !fter the payment has been scheduled% the Financial '#pense Form should be updated to ensure that an accurate record of the approval and payment is documented !lthough the form must be revised after the e#pense has been approved% it should also be updated throughout the process to ensure that the Project Manager always has current e#pense information at all phases of the project lifecycle

Project Cost Management Process Template% version 4 5 "56 46 47$

Project Financial Management Process 0+date Project Plan 1n a regular basis "typically wee*ly$ the Project Plan is updated% with the total e#penditure recorded against each project tas* as listed within the Financial '#pense Form This enables the Project Manager or !dministrator to& Produce a view of the overall financial of the project to date Identify any e#ceptions "e g instances where the actual e#penditure e#ceeds the planned e#penditure$ +ote if the time frame of a tas* will be impacted while waiting for an e#penditure approval or payment

Noti#y Project '+onsor o# 29ce+tion The Project Manager should identify any e#penditure deviations to date /ased on the deviation from the plan% the Project Manager may& Change the individual ) amount of resource allocated to a tas* !llocate additional funds to complete a tas* 9e(uest assistance from an e#ternal supplier to complete the tas* 9aise a project issue for action by the Project /oard ) -ponsor

Mar: -as: as "om+lete 1nce each tas* is completed% the respective tas* within the Project Plan is mar*ed as 455H complete and no further e#penditure may be allocated to the tas* for the duration of the project

1.7

Finali;e and "lose 8udget

!fter ensuring that all project e#penses have been paid for and no other tas*s)e#penditures remain outstanding% the Project Manager or !dministrator should issue a final Financial '#pense Form to the Project -ponsor for approval 1nce approved% this information should be included in the Project Closure 9eport for project historical purposes

! Financial Management .oles

The following roles and responsibilities will apply on a typical project% however% the number and types of roles will depend on the si.e and comple#ity of the project For instance% on a small project the Project Manager may fill the role of Project !dministrator 9egardless of who actually fills each role% it is important to identify e#pense responsibilities re(uired to be underta*en on the project For instance&

!.1

Project 3dministrator
9eceiving input from staff regarding project e#pendituresI ensuring that this information is complete and at the re(uired level of detail needed to ma*e informed decisions Completing the Financial '#pense Form for supplier invoices received Forwarding all e#penses to the Project Manager for approval

Typically% a Project !dministrator will manage the day2to2day e#pense process by&

Project Cost Management Process Template% version 4 5 "56 46 47$

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Project Financial Management Process Maintaining the Financial '#pense Form to ensure that all project e#penditure information is accurate and up to date 'ntering summari.ed e#pense information into the Project Plan and identifying any e#ceptions for the Project ManagerEs attention !rranging payment of each e#pense once approved

!.!

Project Manager

The Project Manager has overall responsibility for the Financial Management Process% including& 'nsuring that all staff are informed of the Financial Management Process% that they understand when the importance of relevant e#pense information to ensure that the Financial '#pense form is accurate in a timely manner 9eviewing and approving all project e#penditures 'nsuring that the project plan is up2to2date with latest e#penses for specific tas*s 0rawing up action plans to address any deviations from plan 9esolving all e#pense issues with staff members or suppliers and raising any critical e#pense2related issues with the Project /oard ) -ponsor for action
6

6 6

!.6

Project '+onsor

The Project -ponsor plays a vital role in the successful e#ecution of the project budget :e)she has the authority to approve)deny the payment of any e#penses beyond an agreed upon limit after consolidation with the Project Manager and)or Project /oard It is the Project -ponsorGs role to gather as much information as possible to ma*e informed decisions that may or may not impact the ultimate success or a project

6 Financial Management %ocuments

6.1 Project Financial 29+ense Form
The Project Financial '#pense Form is a wor*ing document which is completed by a project member to trac* project e#penses

6.!

Project "losure .e+ort

The final project budget vs actual cost should be included in the Project Closure 9eport

Project Cost Management Process Template% version 4 5 "56 46 47$