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Project Financial Management Basics

Financial management is increasingly becoming important in modern day organizations. In the same way, such tools as project management when used well by organizations will lead to improved management of all business undertakings. With project management, an organization is capable of achieving its objectives within the stipulated costs, time and in the needed quality. This is the core of project management. The aim of this paper thus is to identify the nature of projects, as well as the critical success factors and how they contribute to the success of the project.

(Clarke, 1998). 1. The project manager, project personnel and the project

There is a very interesting relationship between the project manager, the personnel undertaking the project and the success of the overall project. The implication here is that the success of any project will depend on the human resources in charge of the project. It therefore means that even with massive financial resources, without the requisite human resources, the project will still not succeed hence the need for project human resources management.

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Project human resources management is thus a combination of several steps leading up to the organization and management of the project team.

(Noshahi,2008) This involves identification as well as the definition of project team roles and responsibilities after which the project team is selected. The next step is to develop the team members in terms of their skills in order to unlock their full potentials. Finally the process involves managing the project team in terms of performance management systems. (Noshahi,2008) Therefore it is imperative that if a project is to succeed then the most appropriate human resources in terms of expertise and level of experience is required.

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2. Work Breakdown structure in project management

Work breakdown is a very important aspect in project management. It is also known as project scheduling. (Clarke, 1998). The main issue here is to break down the whole project in terms of several activities. Each of the project activity is scheduled to be undertaken within a specific time frame. The project is accomplished in a sequential manner where one task is accomplished before the next one can be initiated. This is particularly very important for very big projects that are likely to take long. Project scheduling is important because it is a way of project monitoring and evaluation.

Through project scheduling, the project manager is capable of monitoring the success of the project by ensuring that the project is progressing within the specified time. 3. Critical success factors in a project The first critical success factor in any project is risk assessment and monitoring. The successfulness of any financial project will depend on how effective the risk manger identifies and manages the risks that face the project. (Abouberk & Suzanne, 2006). Risk in financial projects cannot be avoided but can be reduced to manageable levels where their occurrence will have less financial implications.

The other success factor is able managerial skills. With a strong managerial capacity, an otherwise considered bad project has the potential of succeeding as opposed to a good project in the hands of poor management. Technology is another key success factor. Technology enhances the success of any project by enhancing the efficiency of operations. The implication here is that with increased efficiency the project is capable of achieving it objectives. The other success factor is effective communication, clear project objectives and scope as well as project planning among others. (Clarke, 1998).

The challenge for the project manager therefore is to harmonize theses interrelated factors as to achieve overall project success. 4. Project financial management The whole process of undertaking and managing a project is pegged on financial management. Usually, the major reason why organizations undertake projects is to meet their strategic objectives. Before any project is undertaken, there is need to undertake project financial appraisal which is an analysis of all the proposed projects to find out if their viability. The implication here is that the aim of undertaking a project is to add value to the organization.

That is to say that the aim of financial management within project management is to appraise the project to ensure that the project chosen is in tandem with the goals and objectives of the organization as well as being capable of generating returns. (Withrow, 2008). Conclusion Project financial management is therefore an activity which tales place right from the beginning of the project. In my opinion, this process is very necessary because if conducted well it, will indicate the projects that will have positive financial implication for the organization.

The implication here is that the project should be profitable to the organization in the sense that the benefits that would be derived from undertaking it should outweigh all its costs. All projects have massive cost implications thus project financial management is important not only in choosing a viable project but also in minimizing wastages. The process should therefore be carried out throughout the life of the project since it is an evaluation method. References Aboubekr,M. and Suzanne, R. (2006). Key Success Factors for the Project of Migrating to the Open Office Suite.

Montreal: Cirano. Available at http://www. cirano. qc. ca/pdf/publication/2006RP-05. pdf Clarke ,A. (1998). A practical use of key success factors to improve key success factors to improve the effectiveness of project management. UK:Elsevier Science Ltd and IPMA. Nashahi,M. A. (2008). Project human resource management. Elyse Nielsen Withrow, S. (2008). How financial analysis can impact project initiation. UK :CBS Interactive. Available at http://www. builderau. com. au/strategy/projectmanagement/soa/How-financial-analysis-can-impact-project-initiation/0,339028292,339178420,00. htm

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Project Financial Management Basics. (2020, Jun 02). Retrieved from http://studymoose.com/project-financial-management-basics-new-essay

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