Understanding the Importance of Project Finance Management

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Finance management is the primary attribute of any organization. When it comes to project management finance is the main area of focus. The finance management team will take care of the organization and deals with the analysis and review of the activities and the financing and determine the ability to create value for the company and its shareholders.

Factors that make Project Finance Management Important

The financial analysis involves several key issues to ensure the prosperity of the company. Therefore, all the companies have a finance management team dedicated to taking care of the monetary needs and transaction.

The financial management team deals with various aspects of the business including the economic environment of the company and the growth prospects along with the degree of the competition witnessed and expected. The stakeholder relationship and production tools are also included in the teams actions.

If the monetary aspects are not taken care of in a project, then the projects will not be able to complete with the required results. It will also affect the overall growth of the company. The availability of the resources, salary of the employee, managing cost of production and sanctioning funds for the project are the important aspects the finance management team handles.

Current thinking revolving around the project management methodologies is discussing the financial aspects of the project with the prime focus on it. Therefore, the business case is receiving minimum time and effort from the project team resulting in the rushed job in the end. Investing in the correct resource and people is important to ensure the total on target delivery of the project.

In the current financial climate, the budgets and costs are being cut it is time to ensure wise investment of the available funds for the project. For achieving the desired result, it is important comprehensively to review the budget and costs involved in the project.

Guidelines for Successful Project Financial Management

Here are important steps to achieve project financial management sucessfully:

  1. Provide sufficient time to create accurate feasibility studies instead of rushing the job when it is a new project. Otherwise, it will result in overspends at the end.
  2. Project portfolio must be reviewed for identifying the positive and the negative aspects of the project. Finding out the importnace of a project and if they are correct and they are adding value to a robust business case and for the future benefit of the firm. There should not be any political reasons for carrying out the project which will impact negatively on the company in the future.
  3. Concentrating on the costs, as well as the benefits, is valuable in the progress of the project. In most cases, there is no review of the promised and delivered result of the project. Therefore, it is important to concentrate on the project and continuously check on the costs included in the budget that changes the project and not altered in the benefits of the project.
  4. Cutting the costs of the project is not the best answer to the issue when it comes to the investment. Allocating resources that adds value to the project is critical in the current trend of leaving the projects in flight without having right amount of resources that in turn affects the project in a negative way. Instead, it is beneficial to review the project ad spend as required and focus on the aspect of adding the value to the project.
  5. Skill is an important tool for the success of any project. Workforce development should be one of the main aspects the company is focusing. The workforce must be knowledgeable about financial management especially the non-finance manager who is in charge of a large project. It is not a wise decision to leave the financial management to chance. Therfore development of the workforce is critical.
  6. Breaking down the financial aspects of the project into manageable sections can help in handling the finances better. Treating the budget of the project like a pot of cash which is accessible for any requirement in the project leading to the shortage of budget is one of the main problem that can be avoided using this technique. The manageable sections can be mapped to the project structure that will help in understanding the workstream and their spending characteristics such as over spending and under spending.
  7. Too many accounting managers may lead to budget overspend. Following the above information the overall budget must be under direct control of the project manager. Each head of the project must be in control of their allocated amount of the budget. The set up of one point of contact accounting will result in better handling of the budget and completion of the project in the expected result.
  8. Delivering meaningful and focused financial report is critical to enable perfect decision-making. The report must start will minimum and continuously improve from the start to the end of the project needs that has to be managed through the programme of the work. The reporting containing exact and meaningful information will reduce the time required for making the right decision. Therefore, the report must be minimum in length and maximum in information.
  9. Communication has a higher potential to make the relationship between the project and the financial managers of the project. The finance management must be kept inside the project groups, and it should not be back office affair. Finace management must be part of the project and actively participating in the progress of the project. Honest communication is achieved through the method of involving the finance managers in the project.
  10. The finance management must be kept t aware of the potential risks and the probable cost. It will ensure they will handle the issues when it comes to finances in the situation of the financial crisis. Early warning and awareness play a significant role in managing the finances and the progress of the project in a positive manner.


Without project management, it is impossible to handle the fluctuation in the finance of the project. Every project must be ready to face the financial ups and downs well ahead of their occurrence.

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