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Project Accounting

"With all projects, especially large projects, numerical data proliferates. So much that trying to make sense of it, or trying to balance the data becomes a huge management effort. The building block of all this data is the actual number of hours worked on each task. That seems pretty simple, but that simplicity is deceiving. These hours are usually captured multiple times by multiple systems. From a project management standpoint, you are trying to capture the hours in your project management tool of choice. You need this in order to ascertain variances, relevel the project plan and provide reference points for your estimating repository. But other organizations want this information also and not necessarily in the same form or level of detail. Project team members may be entring these hours onto a timesheet and into a corporate time-keeping system. If they are external service providers, they may also be capturing time for their own company's time-keeping system and for their billing system as well! Some people have been able to automate some of this data collection but many have not. With so many differing points of data entry, discrepancies can occur. This situation gets worse when time reporting is due before the end of the work week and then the actual hours change between the time the data is entered and the end of the week."
"Bresides the labor collection, there are verification and balancing activities for other project assets such as hardware, software, office supplies, office spance and any other item for which you have been invoiced that a project manager may have to approve. These items are very important when determing the total cost of a project. Likewise, untimely payment for goods or services can have a negative effect on the project schedule. These items do not manage themselves! Managing the project is tough enough without having to untangle this accounting nightmare. This is an excellent opportunity for the project management office to assist the project manager in real-time everyday activity."
"The project office accounting person does not have to be an experienced project manager, although it is an excellent position for project managers in training. Obviously, this person must have excellent analysis skills and a great attention to detail. As with other project office positions, this person and the project manager can be mutually beneficial to each other. While the project manager can teach the would-be project manager the practical ins and outs of project management, the project office accounting person can provide much needed relief of important administrative functions. Specifically, the project office accounting person can:
  • Verify actual hours recorded in the project management tool  As mentioned previously, this function is critical to reconciling the various timekeeping mechanisms and deriving the labor cost of the project.
  • Reconcile invoices and purchase orders  Usually the project manager is the first line of approval on purchase orders for labor, hardware, software, and other project-related items. Matching and reconciling invoices to purchase orders can be time consuming, especially when discrepancies arise. The project manager can be more efficient by having the issues resolved and ready for approval when the time comes for authorization.
  • Track project budget performance  In a project rescue situation, the project manager is constantly asked for this information. Besides providing it formally on the weekly and monthly status reports, ad hoc requests appear to come non-stop. Having another person focus on the entire budget performance decreases the chance of the 'surprise' items that were realloy known at the onset of the project but received inadequate attention when compared to other project issues."
"You may find other meaningful tasks the project office accounting person can perform to help the project manager. As in the preceding examples, these tasks should be of assistance but this person should not have direct accountability. That is reserved for the project manager."
The above is an excerpt from a book written by Sanjiv Purba and Joseph Zucchero, published by McGraw-Hill/Osborne, 2100 Powell Street, 10th Floor, Emeryville, California 94608 U.S.A. Sanjiv has over 20 years of experience managing large projects and many years engaged in rescuing ailing projects.