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Finance in Project Management

The document discusses finance concepts for project managers including company budgets, delivery costs, overhead costs, revenue, profit calculation, and earned value management. It provides examples of calculating costs such as payroll and overhead using different methods. It also discusses factors that impact revenues, costs, and profits and how project managers can influence these factors through team setup, technologies, methodologies, and risk management. Earned value management is introduced as a methodology to assess project performance using planned value, earned value, actual costs, schedule variance, cost variance, schedule performance index, and cost performance index.

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Сергей Космачов
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72 views

Finance in Project Management

The document discusses finance concepts for project managers including company budgets, delivery costs, overhead costs, revenue, profit calculation, and earned value management. It provides examples of calculating costs such as payroll and overhead using different methods. It also discusses factors that impact revenues, costs, and profits and how project managers can influence these factors through team setup, technologies, methodologies, and risk management. Earned value management is introduced as a methodology to assess project performance using planned value, earned value, actual costs, schedule variance, cost variance, schedule performance index, and cost performance index.

Uploaded by

Сергей Космачов
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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FINANCE FOR PROJECT MANAGERS

COMPANY BUDGET
Prerequisites: PnL report:
• Company Strategy • Focus on
• Annual Plan & effectiveness
Budget • Give us a possibility
• Monthly Budget to analyze on a
• KPI Dashboard project and person
level
• Reports
DELIVERY COSTS
1) Headcount x Internal rate х Hours
100 people x 20 euro x 160h = 332 000 euro

2) Headcount x Average salary


100 people x 3320 euro = 332 000 euro

3) Payroll (332 000 euro)


OVERHEAD COSTS
1) Flat amount (e.g. based on previous month)
100 000 euro

2) By developer
100 000 euro / 100 people = 1000 euro

3) Detailed
Office = 75000, Food = 5000, IT = 20000
REVENUE
1) Headcount x External rate х Hours x Utilization
100 people x 32 euro x 160h x 85% = 435 000 euro

2) Headcount x Average revenue


100 people x 4350 euro = 435 000 euro

3) By clients (200 000 + 235 000 = 435 000 euro)


4) History and grows (391 680 + 10% = 435 000 euro)
HOW DO WE MAKE MONEY?
Let’s keep it simple…
• revenues
• minus cost (direct and indirect)
• = profit
MORE DETAILS AND HOW TO IMPACT
Revenues Direct Costs:

• Headcount • Salary
• Price (rates) • Licenses
• Utilization • Hardware

# FTE * # HOURS * RATE

• And… Indirect Costs:


• Seniority
• Travel • Education
• Idling
• Fun stuff
• Knowledge transfer
• Delivery management • Travel
• Standby service • Recruitment
• Marketing
• IT (Depreciation)
• Office
• Overhead
• And tax…
HOW TO IMPACT?
• Team setup/seniority
• Technologies
• Software to use
• Scope
• Methodologies
• Risks
EARNED VALUE MANAGEMENT
EVM is a methodology that combine scope, schedule, and
resource measurement to assess project performance and
progress.
The following dimensions and statistics are monitored for each
work package and control account:
• Planned value - PV
• Earned value - EV
• Actual cost - AC
• Schedule variance - SV
• Cost variance - CV
• Schedule performance index - SPI
• Cost performance index - CPI
EARNED VALUE MANAGEMENT
• SV=EV-PV

• CV=EV-AC

• SPI=EV/PV

• CPI=EV/CV

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