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Project Intelligence – Sage Simply Accounting

March 27, 2011

Project Management Objectives

The business manager within us will tend to leap to ‘Profit’ as the main objective of each project and in the short term, what a noble goal. Those having a more sustainable view, let’s call them the ‘altruistic entrepreneurs’ might define the objective as ‘maximizing the business value that each project delivers to our customers’. When the project falls on the lap of the project manager, the definition generally changes to ‘deliver exactly what we promised and close the project’.

All of these functions, however, share the same tactical focus about active projects, being ‘what is the actual vs budgeted profit’. The answer to this question includes parameters like ‘percentage completion’, ‘projected markups’, ‘available resources’,  but the scope of this article is limited to Project Budgeting and Forecasting using SSAI.

Project Management Options

One of the dilemmas facing project managers is finding the balance between predictability of resource allocation and flexibility in responding to changing project outputs (outputs normally change in response to newly available information).

Traditionally, in more physical project environments with easily defined outcomes, sequential tasks and milestones were planned up front, projects had a very long planning horizon and predictability was one of the benefits obtained. Project managers refer to this sequential, predictable style of project management as a ‘waterfall’ model. The planning philosophy here is: plan, design, build.

In recent times, a brand of project management called ‘agile’ management has surfaced in response to the need for creativity injection, rapidly changing customer needs / technological advances during the project and complete, releasable phases within the project that have very short time horizons. The planning philosophy here is: envision, explore, refine.

An advantage of the waterfall model is the ability to create a budget for a long time horizon and an advantage of the agile approach is responsiveness to change.

How does SSAI compliment both models from an ‘actual vs budget’ point of view?

There are two broad approaches to this solution, both exposing the flexibility that characterizes SSAI. The first two solutions serve the ‘waterfall model’ and the third solution serves the ‘agile model’. All three solutions aim to assist management in monitoring project expenses and profits.

1)   Total Actual vs Budget per Project – Waterfall Model

This BI solution is a standard solution which ships with SSAI and exposes the full functionality of MS Excel for filtering, sorting, expanding and general analysis.

2) Monthly Actual vs Budget per Project – Waterfall Model

Recognized revenues and expenses are compared to budgeted figures to provide variance reporting    on request.

3) Monthly Actual vsForecast per Project – Agile Model

This solution provides management with the option to compare the recognized revenue on a project to either the project budget hosted in Simply Accounting or a forecast hosted in SSAI. The forecast in SSAI affords management the opportunity to swiftly change forecast values and execute ‘what-if’ analysis on individual projects or all projects.

Figure 4 below provides a drill-down to a particular project’s resources and their associated budgets / forecasts. Resource budgeting would be done within SSAI and provide tighter control over projects, exposing high and low performing resources.

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