Posted by: kerrywills | May 27, 2011

Good thing I took Accounting classes


Because of the amount of money that companies spend on IT (Billions), they tend to manage project finances tightly. This makes financial management a key skill set for Project Managers to have. Here are some of the things that we need to manage on a regular basis…

  • Project estimates for work
  • Accruing for invoices and upcoming expenditures
  • Tracking actual costs incurred on the project
  • Conducting varianceĀ  analysis against budget
  • Forecasting remaining work

Some companies go as far as having Project Managers understand capitalization rules (see SOP 98-1) so that the assets get reported properly. For example systems training is considered a “non-cap” expense while requirements are capitalized.

It's all dollars and cents!

Some people in the Project Management profession do not enjoy the financial aspect but it is a critical and necessary part of our jobs. The expectation of stakeholders is not just to deliver projects, but to do them within budget. Therefore it is best to understand finances and be comfortable with them, as they are a reality in our profession.

That’s my two cents – but since this blog is not considered an “asset” these two cents will be expensed.

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Responses

  1. What type of accounting class or course or certification would complement the PMP certification for the purpose of providing additional credentials that would cover the bullet items that are listed in the original post?

    • A class on Corporate Accounting might make sense. Best advice would be to sit with a financial controller of your organization to explain the capitalization rules and your company’s tools and processes.


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