Importance of Project Management in Finance and How it Simplifies… (2024)

Project managers prioritize efficiency and assurance, crucial for easing stakeholder concerns and ensuring smooth project execution. Despite juggling multiple projects with unique goals and timelines, they navigate challenges like resource allocation, regulations, and budgets.

Effective project management involves setting budgets, tracking expenses, managing resources, and mitigating risks, enabling on-time and within-budget project completion and helping organizations achieve financial objectives.

Why is Financial Management Important?

Within every business, cash flow must be carefully monitored. The cash coming in and out impacts the business’s ability to meet financial obligations—paying employees, suppliers, operating expenses, and any outstanding debts.

Financial data is also a key driver in many business decisions. When it’s time to pull the trigger on investments and expansions or allocate resources, this data prevents decision-makers from flying blind. Through financial management practices like budgeting, forecasting, and cost control, businesses can minimize their costs and maximize revenue.

Why is Budget Management Important?

Budget management is just one component of financial management. However, it’s arguably the most important. Think of it like the foundation of a building. It provides a solid base for the entire project, laying the groundwork for a successful project by outlining financial resources and allocating funds appropriately.

Unfortunately, not even the most well-planned projects are immune to scope creep and roadblocks. A well-managed budget helps an organization manage these hurdles and make decisions that drive profitability and growth.

Related: Maximizing Budget Efficiency in Enterprises: A Guide to Financial Management Software

The Role of Project Management Software in Financial Management

Now let’s talk about financial management’s secret weapon: project management software. It’s a suite of tools that helps streamline project planning, execution, and monitoring. Project management software offers various features that come in handy when you’re trying to keep a project on track including task management, resource management, reporting, and workflow management.

Integrating project management software with your financial management processes can revolutionize your project outcomes. How? By tracking your budget, logging expenses, generating invoices, and creating financial reports.

Project management software for budget management helps you keep your projects moving while monitoring the finances. Many tools allow you to break down costs into categories and track actual costs incurred against the budgeted amounts in real-time. If a project is in danger of outpacing its budget, you’ll know ahead of time so you can make changes. In fact, organizations that use project management software experience up to 28 percent less budget overrun on projects.

Project management software also helps keep cash flowing through your business. As teams complete project milestones, the software can generate invoices. By connecting your invoicing and accounting systems to your project management tool, you can make sure clients and suppliers pay on time. Gone are the days of forgotten invoices and late payments.

The Role of Budget Management

Accurate budgets lead to completed projects and happy clients. Having the right project management software is the key to meticulous financial forecasting. Project managers must be able to create detailed, realistic budgets. To do this, they need historical data, resource costs, and task breakdowns at their fingertips. If they can anticipate roadblocks based on previous projects, they can better mitigate the risks.

The benefits of project management in finance are endless—project management tools offer comprehensive expense and revenue tracking capabilities. Real-time insights into project financials allow project managers to cut costs, optimize resources, and identify opportunities to grow revenue.

Best of all, project managers can feel confident in their data. Aggregating data across systems is a headache for many PMs. With the right project management software, they don’t have to worry about errors, double entry, or spending hours pulling reports to get a clear financial picture. Before a project is complete, PMs also get a preview of the project’s predicted profitability and impact on revenue.

Boosting Efficiency and Cost Savings

Manual processes are a powder keg for projects. Even the most minor error in a dataset or budget can set off a chain of events that impact a project’s outcome. This might mean suppliers can’t procure the needed materials or the company can’t take on additional projects as planned. On average, companies lose 20 to 30 percent of their annual revenue due to inefficiencies in manual processes.

Project management software for budget management streamlines financial workflows. By automating repetitive tasks, reducing manual entry, and facilitating seamless collaboration, companies can cut costs and improve resource utilization. Not to mention, project management software significantly reduces administrative overhead and decreases the likelihood of those costly errors.

Cost-Saving Project Management Tools

Here are a few project management tools to consider:

Quickbase

Quickbase is a no-code platform that helps companies make complex tasks like financial management simple. No matter your industry, Quickbase offers Dynamic Work Management solutions that are customizable to fit your business.

Benefits:

  • Easily create, connect, and customize applications to fix visibility and workflow gaps so you have control of every dollar

  • Sync data from your ops system to proactively identify resource gaps

  • See change orders before they occur so you can make adjustments to timelines and budgets

Microsoft Project

Microsoft Project offers a powerful, easy-to-use app for keeping projects on track. It gives project managers access to advanced financial data and budget management functionalities so they can reign in projects when needed.

Benefits:

  • Track project costs including labor, materials, and other expenses

  • Plan and forecast resource needs across multiple projects and track actual resource costs against budgeted amounts

  • Create customizable reports to track project financials and get at-a-glance financial updates

Wrike

Wrike streamlines work processes across departments to empower collaboration and efficiency. Project managers can keep a tight grip on their finances, all from a single source of truth.

Benefits:

  • Set cost baselines and track variances to identify potential budget overruns early on

  • Maximize resource utilization by assigning work based on availability

  • Create visual dashboards and charts for at-a-glance updates

Risk Management and Forecasting

Tackling a new project shouldn’t feel daunting. Imagining all the ways a project can go wrong is enough to make any project manager spiral. With a project management tool, PMs can get a step ahead of risks and financial forecasting.

Project management software is a powerful tool for identifying and mitigating financial risks. Potential threats like budget overruns, resource shortages, and market fluctuations are significantly easier to manage when teams are aware of them from the start of the project. Project managers can take proactive measures to neutralize any threats and keep them from derailing the project’s financial health.

Forecasting is also a valuable feature. Through project management software, PMs can see historical project data and identify financial trends. When it’s time to make important decisions and prepare their teams for potential hurdles, project managers have the data they need to steer everyone in the right direction.

Enhancing Collaboration and Communication

Financial teams may sometimes feel like they’re working on an island. Unless issues arise with a project’s expenses or budget, the financial team may have little interaction with the project team.

Project management software for budget management acts as a bridge, giving finance teams greater visibility. It’s a centralized platform where teams can share financial data, budgets, and reports. Not only does this help eliminate data silos, but it ensures everyone is communicating and working from the same financial information.

Project management software is also a powerful tool for collaboration. Many solutions offer built-in features like document sharing, messaging, and video conferencing. Stakeholders, including financial teams, can communicate in real-time, promoting transparency and accountability throughout the project.

Real-Life Case Studies

Want to see the benefits of project management in finance? These case studies speak for themselves.

Cooper Construction Services

Cooper Construction Services, a 50-person construction company that manages $10-$20 million in project per year, needed a way to track varying pay rates for its contractors. Calculating fringe wages was nearly impossible with spreadsheets.

Using Quickbase, Cooper developed a time card app to automate the management of employee compensation and fringe wage data. This helped the company ensure each employee was paid based on the correct wage, without the need for manual calculations in a spreadsheet.

Results:

  • $20,000 annual savings in payroll taxes

  • Fewer staff hours spent on manual data entry

  • Streamlined workflows and business processes

Presti & Naegele

Similar to Cooper, used spreadsheets to help their clients manage their financial data. The firm needed a better way to manage and track the accounting services they were providing, and manual spreadsheets fell short.

By creating a customer relationship management (CRM) app, Presti & Naegele has seen gains in productivity and profits. The firm can access customer interaction data along with insights on which clients would benefit from an update to their accounting software.

Results:

  • Increased revenue from optimized CRM data and 30-40 new clients each year

  • Secure access to passwords and login data

  • Productivity improvements with centralized access to data

The Bottom Line

Project managers ensure smooth project execution by focusing on efficiency and addressing stakeholder concerns. They handle resource allocation, regulations, and budgets across projects. Effective management includes budgeting, expense tracking, resource management, and risk mitigation, aligning financial initiatives with business strategy. Using project management software enhances financial outcomes and efficiency.

Ready to simplify the way you manage projects and keep budgets on track? Request a free trial of Quickbase today!

Importance of Project Management in Finance and How it Simplifies… (2024)

FAQs

Importance of Project Management in Finance and How it Simplifies…? ›

The benefits of project management in finance are endless—project management tools offer comprehensive expense and revenue tracking capabilities. Real-time insights into project financials allow project managers to cut costs, optimize resources, and identify opportunities to grow revenue.

Why is project management important in finance? ›

Why is project financial management important? Briefly, financial project management aims to keep projects within set budgets. In doing so, financial management for projects on an individual level not only helps you organize and manage projects better but also positively impacts business growth.

Why is project management important in simple words? ›

Project management is important because it helps ensure that projects are completed on time, within budget, and to the expected quality of work. It also helps identify and mitigate risks, manage resources effectively, and ensure stakeholders are well informed and involved throughout the project.

What is the relationship between finance and project management? ›

By having a solid understanding of finance principles, project managers can develop accurate project budgets, monitor expenditures, and control costs effectively. Without this financial acumen, project managers may struggle to keep projects within budget and risk project failure.

What is the importance of project finance? ›

Off-Balance Sheet Financing

Project financing enables companies to keep the debt off their balance sheets, preserving credit capacity for other purposes. This off-balance sheet treatment is especially beneficial for businesses looking to maintain financial flexibility.

Why is management important in finance? ›

Solid financial management enables the CFO or VP of finance to provide data that supports creation of a long-range vision, informs decisions on where to invest, and yields insights on how to fund those investments, liquidity, profitability, cash runway and more.

What is the role of a project manager in finance? ›

Finance project managers develop and oversee a variety of projects related to an organization's revenue, from annual statements to investment vehicles. This role combines the financial oversight duties of an accounting professional with the team leadership and coordination of a project manager.

What is the main purpose of project management? ›

In other words, the purpose of project management is to plan and manage a project to successfully complete its listed goals and deliverables. It involves identifying and managing risks, carefully managing resources, smart budgeting, and clear communication across multiple teams and stakeholders.

What is the most important thing in project management? ›

The most important thing is to be intentional, listen to your team, and collaborate with your team members. The rest will follow. Project management doesn't need to be complex.

What is project management in your own words? ›

Project management is the act of planning, organizing, and managing a project in order to achieve a predefined goal or outcome. All types of businesses rely on projects to achieve many of their short-term and long-term goals, because projects are how things get done.

What is project management in finance field? ›

Key responsibilities of project managers in finance

Managing all assigned project team members. Ensuring teams complete work within the budgeted amount. Assembling reports to monitor progress and developing necessary solutions when problems arise. Providing updates on the status of the project and adjusting if ...

What is a PM in the finance industry? ›

A portfolio manager (PM) is a professional responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions.

What is project management in accounting and finance? ›

Project management accounting is where a project's costs, revenue, and billing are planned, monitored, and analyzed to help meet the overall financial goals. Tracking every input and output allows project managers to analyze every financial detail, no matter how big or small.

What is project finance management? ›

Project financial management is the process of handling all financial aspects of a project within an agency. It includes key steps such as estimation, budgeting, risk management, and financial reporting. Another term that's frequently used is project budgeting or project budget management.

What is one benefit of financial planning in project management? ›

Through financial analysis and forecasting, organizations can identify and assess financial risks, market uncertainties, and other factors that may impact project success. This enables businesses to make risk-informed decisions, develop contingency plans, and allocate resources to manage potential risks effectively.

What is the value of project finance? ›

It enables risk sharing. Project financing allows sponsors to share risk with other parties. They do this by paying additional premiums to third-party companies willing to take risks associated with the project.

Is PMP useful in finance? ›

However, not all finance project manager certifications provide the same value for job seekers. The best certifications for a finance project manager are Project Management Professional (PMP), Certified Resume Specialist: Accounting and Finance (CRS+AF), and Certified in Financial Management.

What is the role of PMO in finance management? ›

The primary role of a PMO is to establish and maintain project management standards, processes, and best practices, ensuring that projects are executed efficiently. Further, they also ensure optimal utilization of resources and help businesses achieve strategic objectives.

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