- Foreword and Introduction
- 1: Putting projects in context
- 2: Entity arrangements
- 2.1 Strategic alignment
- 2.2 People and culture
- 2.3 Effective governance
- 2.4 Common APS Requirements
- Summary for entity arrangements
- 3: Individual project proposals
- 3.1 Clarifying the concept
- 3.2 The business case
- 3.3 Approving the project
- Summary for individual projects
- 4: Project implementation
- Appendices
- Quick reference card
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Financial management
Better Practice results: Executives are aware of the full cost of projects as they are implemented; full cost information of previous projects is available to inform preparation of new project proposals.
Projects often use resources from many parts of an entity, and also externally. Good practice is that all these costs are reflected in the project cost-benefit analysis included in the project proposal. For example, there may be costs associated with entity staff from several business areas and from ICT development; as well as payments to suppliers to the project. In addition, financial benefits for a project may be reflected in several parts of the entity’s forward budget – such as changes to staffing costs in different business units or changes to program expenditures. The potential complexity of properly tracking all these costs and benefits means there is a risk that the project sponsor is not able to measure actual performance on the same basis as the project business case.
It is better practice that there are sound arrangements and systems to estimate and measure the costs and benefits of projects, over the full duration of the projects.
This will usually take the form of:
- an accounting system, that will allow budgeting and costing to both organisational units and to project codes;
- advice and assistance from the entity’s Chief Financial Officer and finance team;
- accounting rules; and
- associated training and monitoring to help ensure appropriate data entry on project oriented data.
Preferably the accounting system will allow these planned costs and benefits to be accounted for over the life of the project, and for actual costs to be allocated accordingly. As well as allowing effective monitoring of current projects against their plans, accurately recording actual project costs will assist in estimating costs of future projects.
Accounting rules relevant to projects include properly accounting for any assets created by the project (including capitalisation of software and other intangible assets), and arrangements for internal charging of support and services which are project-related.
In addition to providing support at the entity level, there are financial management aspects to setting up individual projects – particularly cross-boundary projects – which are discussed at page 77 in Chapter 3.
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