Project Financial

Management: Managing
Project Financials
by Brenna Schwartz | Nov 21, 2023

Whether you call it project financial management or project accounting, managing a

project’s finances is essential to delivering a successful project. It’s more than just
keeping up with costs. There’s a lot of planning, managing and tracking involved.

But what exactly is financial project management? We’ll get to that and define the
various project financials before getting into the process of managing a project’s
finances. Then, to help you get started, we’ll have a few free financial management
templates you can download.

What Is Project Financial Management?

Project financial management is the process of controlling the financial aspect of a

project, such as its cost, revenue and profit. To do this requires planning, estimating,
budgeting, funding, managing project expenses and billing.

The budgeting part of project financial management is by far the most important aspect
of this process. Being able to effectively manage the budget over the life cycle of the
project and making sure that all the planned tasks are completed without having to
overspend is critical to the successful delivery of the project.

The importance of project financial management cannot be underestimated. It will help

manage the overall project better and positively impact business growth. That’s
because it balances the investment in the project with the expected return on that
investment.

Other benefits include helping track progress with financial metrics, identifying and
prioritizing projects that have a higher return on investment and managing project
scope and cost overruns. It can also be helpful with improving resource management
capabilities by better allocating resources based on your business’s strategic goals.

Naturally, project management software facilitates these benefits. ProjectManager is

award-winning project management software that can track costs in real time to help
you with project financial management. Our real-time dashboards give project
managers a high-level overview of project costs whenever they want them. Dashboards
have easy-to-read graphs and charts that track five other project metrics, too. Plus,
there’s no time-consuming setup required as with lightweight alternatives. Get started
with ProjectManager today for free.

Pr
ojectManager’s live dashboard captures project costs in real time.Learn more
What Are Project Financials?

Project financials are the money related to the project you’re managing. By planning,
managing and tracking project finances, project managers can help deliver a profitable
project. Project financials center around controlling the following.

Project Costs
Project costs refer to the total funds that a project requires. This includes direct costs,
such as fixed labor, materials and equipment, as well as indirect costs that include
utilities and quality control, among other things.

Free project
budget templateDownload now
Project Revenue

Project revenue is what a project is expected to earn. It’s estimated by looking at

historical data, such as past performance and using that information to predict future
performance. It can be represented by target revenue, which is what the project is
expected to earn and actual billing, what you bill your customer. It can also include the
estimate at the completion of project billing, which is actual billing and the remaining
labor billing which is planned billable expenses plus flat fees for all unfinished activities.

Project Profit

Project profit is the total amount of money that the project earns after expenses. Net
profit for a project is the gross profit minus operating expenses and taxes.

Project Funding Sources

Project funding sources can come from many different sources. For example, debt is
when those funds are raised from lenders. Companies can also issue bonds and sell
them for funding. Equity financing is when a developer raises private equity funds. They
can also get loans to finance the project.

Project Cash Flows

Project cash flows refer to cash moving in and out of an organization and determine the
project’s rate of return or value. This money can be used to fund the project.
How to Manage Project Financials

Whether you’re working on a large, expensive project or a smaller one, managing

project finances is essential to delivering that project on time and within budget.
Following these 11 steps will help you better manage your project financials.

1. Clearly Define the Scope of Your Project

Before you can zero in on the costs, you need to understand the scope of the project.
That includes the project goals, deliverables, tasks, and, of course, costs. Create
a scope statement to ensure that you cover all the bases, such as the project schedule,
and align the project with stakeholder’s expectations.

2. Identify Project Risks

All projects are risky endeavors. Unexpected events can have a positive or negative
impact on the project. Therefore, one must plan for risks by identifying what might
happen and then create a plan of action if it does. It also helps to prioritize their risks,
note the likelihood of them happening, and, if they do, their severity.

Free risk
tracking templateDownload now
3. Do a Feasibility Study

A feasibility study is used to evaluate the project and determine if it’ll be successful and,
therefore, worth initiating. Before you can manage finances you need to see if the
project itself is worth the investment. The feasibility study will help you identify potential
issues and allow for a better evaluation of the project’s viability.

4. Create a Resource Plan

If the project is feasible, then you’ll want to create a resource plan. Resources are
anything you need to execute the project, from people to equipment and materials. In
other words, everything that costs money in a project. Therefore, you must determine
what those resources are and when they’re needed to allocate them accordingly based
on your team’s capacity.

You can use our resource planning template to estimate all the resources that are
needed to execute your project, their costs and the date when they’re needed, which is
critical for estimating your project costs and making a budget.

5. Estimate the Cost of Project Resources

Not only must you make a resource plan, but estimate the cost of those resources.
They will be the bulk of the expenses for the project. Use historical data, expert advice
and anything else you can to create the most accurate estimate for the project
resources as they will be a large part of the overall project budget.

6. Conduct a Cost-Benefit Analysis

Another tool to figure out if the project is worth the time and money is running a cost-
benefit analysis. This tool helps to evaluate the costs of the project against the benefits,
which can be financial or otherwise. This practical, data-driven approach will help make
investment decisions that are more likely to get a return.
 Free cost-
benefit analysis templateDownload now
7. Estimate the Return on Investment of Your Project

Speaking of a return on investment, that’s another metric by which to measure the

potential project before starting it. In other words, you’re going to evaluate the
project from a solely financial perspective to see what its profitability will be.

8. Know The Break-Even Point of Your Project

The break-even point in a project is when the total cost and the total revenue are equal.
This is helpful when making a financial decision about a project especially if you’re
launching a new product as it predicts how many units must be sold, which helps
determine if the project meets market demand.

9. Make a Project Budget

Now you’re ready to make a budget. This should be the most accurate estimate for
your project’s costs. You’ve already defined the project’s scope, now you want to use a
work breakdown structure to identify all deliverables and the tasks necessary to
complete them. You’ll also use the research in making the resource plan, set aside a
contingency fund to cover unexpected expenses and then create the budget.

10. Secure Funding

This budget will be used to help secure funding for the project. This means coming up
with a proposal that outlines your objectives, methodology and the expected outcomes
for the project. It should sway potential stakeholders to fund the project because it’ll
give them a return on their investment.
 Free budget
proposal templateDownload now
11. Track Cost Variance as the Project Is Executed

To ensure that the stakeholders who fund the project get that return on their
investment, you’ll need to track cost variance. This means, comparing the actual costs
of executing the project against what you planned for in the budget. This allows project
managers to see if they’re spending as planned and, if not, adjust the schedule or
scope to get back on track.

More Project Financial Management Templates

Project management templates can help you manage project finances.

ProjectManager’s website is an online hub for all things project management, including
free project management templates for Excel and Word. We have free templates to
help you with every phase of a project. Here are a few that can assist your project’s
financial management.
Project Timesheet Template

This free project timesheet template allows you to keep track of the work hours your
team members have spent on project tasks, their pay rate and their corresponding
payment.

Project Estimate Template

Having accurate estimates is part of project financial management. Use our free project
estimate template for Excel to help you create and keep to your budget. Our free
template allows you to attach labor and materials costs to every task in your project.

How ProjectManager Helps Manage Project Finances

While our free templates can help you get started with your project financial
management process, you’re going to need project management software to be able to
track those costs as you execute the project. ProjectManager is award-winning project
management software that is online so the data you get is in real time, which gives you
the advantage of catching discrepancies in your actual costs compared to your planned
costs quickly so you can respond quickly and get back on track. But that’s only one
small part of how our tool helps you manage finances.

Monitor Labor Costs With Timesheets

Labor costs are often your most expensive. If your labor resources aren’t executing
their tasks according to the project schedule, you’ll be racking up extra costs in no time.
Being able to keep track of your labor costs is essential to staying on budget.
Our secure timesheets streamline the payroll process but also give project managers a
window into the team’s work. You can see what percentage of their tasks have been
completed and if that aligns with where they should be in terms of the larger project
plan.

Use Reports to Get More Detailed Information

While project managers can get a high-level overview of their project’s finances with the
real-time dashboard, when they want more details they can toggle over to the reporting
features. There they can easily general status reports or portfolio reports if they’re
managing multiple projects. They can also general reports on timesheets to track labor
costs, project variance and much more. All reports are customizable, which means they
can be filtered to show only the data you want to see. Then they can be shared in
various formats with stakeholders to keep them updated.

Delivering your project to a successful completion takes more than financial

management. That’s why our software has risk management, task management and
resource management features to ensure you have the control over your project that
you need to bring it in on time and within budget.

 ProjectManager is online project management software that connects teams

no matter where they are, in the office, out in the field or anywhere in
between. Share files, comment at the task level and more to foster better
collaboration. Join teams from Avis, Nestle and Siemens who use our
software to deliver successful projects. Solutions
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GET YOUR FREE

Project Budget Template for

Excel
Get your Project Budget Template for Excel or open it in ProjectManager, the best way
to manage your projects online.

Open in ProjectManager Download Excel File

A project budget contains the financial details of your project, including the estimates of
all the project costs and the money you need to layout to lead a successful project,
from resources to materials.
Monitor project expenses with this Excel budget template. It even includes color-coding
to let you know when you’re in the red! The budget is the life’s blood of your project, so
you need to monitor it accurately to avoid cost overruns. That’s where this project
budgeting template comes in handy.

Or, better yet, build your project budget in ProjectManager. Set a budget at the creation
of a project, estimate planned costs and enter actual costs as the project unfolds. Even
incorporate labor rates for your team, so you can monitor resource costs during
execution. Use the Gantt chart, Sheet view and dashboards to compare actual costs
versus planned costs to make sure you deliver on budget. Get started with
ProjectManager in minutes and start dynamically tracking your budget.
ProjectManager is free to use and more powerful than Excel.Get started

Why You Need a Project Budget Template

A project is made up of tasks that lead to the completion of a project or service. That
process isn’t free. There are resources necessary, such as hiring a project team,
possibly contracting vendors, maybe parts and a whole slew of other expenses that
need to be paid and accounted for.

That’s where budget management comes in, during the project planning phase. It’s
imperative that you calculate what the costs of these things will be as close as possible
to create a realistic cost baseline, get the allocated funds and not go over budget,
which could jeopardize the entire project.

That means your cost estimates have to be accurate, or as much so as you can make
them. This project budget spreadsheet can help you do that.

ProjectManager’s free project budget template.

There’s a lot of uncertainty in managing a project, which makes creating the budget
plan difficult, but with a free Excel budget template you’re on solid ground to build a
financial model that’s sound and able to do the job at hand.

Some of the project costs are easier to collect, such as:

 Labor costs

 Consultant fees

 Raw materials

 Software licences

 Travel

Other project costs may change or carry from one project to the next, such as:

 Telephone charges

 Office space

 Office equipment

 General administration

 Company insurance

When you have downloaded and created your project budget template, there are all the
fields necessary for you to get started on this pivotal project planning process. But
without an expense tracking tool to collect all this data, you are starting off with a
disadvantage. The budgeting process may seem like fuzzy math, and it’s certainly no
exact science, but with the proper project budgeting software you can have a better
handle on defining the financial constraints of your project. By doing so, you have given
the project a better chance to succeed.

Besides budget templates, two such project management tools that can help you
manage budgets are Gantt charts and dashboards. ProjectManager offers an award-
winning Gantt chart feature that lets you apply costs directly to tasks. You can also
assign labor costs to team members, and that potential cost is automatically calculated
as you assign them tasks and work hours. Plus, as the project unfolds, our real-time
dashboards can track project costs and compare them against your initial planned
costs, so projects don’t even have to go over budget.
ProjectManager’s real-time tracking tools help you manage expenses.Try It Free
When To Use a Project Budget Template

Money makes the project happen, so it’s likely the costs will be discussed during
project initiation. However, traditionally, budget management concerns begin to be
addressed during the planning stage of a project.
You can’t figure out your budget without first knowing what it’s going to pay for. That’s
why budgets are conceived as you start to plan and organize your project schedule. To
make an accurate project schedule, you need to define the work that will be done and
how long it will take. To do so, you can use a work breakdown structure (WBS) to
identify all the project tasks. Those tasks depend on having the funds to pay for the
resources needed to execute them.

Our free budget template is really a cost control mechanism to compare what it will cost
to complete the project against what the project has been authorized to spend.
Therefore, the budget spreadsheet template allows project managers to build their
budget within the cost and time constraints of the project.

A project budget is defined by estimating costs for all the individual tasks that make up
the project, including the resources needed to execute them. You’ll need those cost
estimates to fill out your project budget Excel template. You can use our estimate
template to make your estimates and share them with your stakeholders.

Who Should Use this Free Project Budget Template?

The buck stops with the project manager when it comes to overseeing every aspect of
a project, which includes filling out and maintaining this free project budget template.
They will work on the project budgeting activities, but not alone. In order to make more
accurate cost estimates, project managers will seek guidance from those people on the
project team who are involved in executing the project.

Once the project budget has been completed, the team will be released to focus on the
tasks they’ve been assigned. The budget management will remain the purview of the
project manager, but depending on the size of the organization, the day-to-day work
might go to an administrator, such as a project coordinator or assistant project
manager.

However, the project budget is also shared with stakeholders. They need to stay in the
loop and often have change requests throughout the project that will directly impact the
budget. Therefore, during stakeholder presentations, budgetary issues are usually part
of the agenda, if only to determine if the project is not going over budget.
How to Use ProjectManager’s Project Budget Template
for Excel

Your free Excel template is a blank slate and now you have to turn it into a useful tool.
By filling in as much of the information requested in this project budgeting template as
you can, you begin to get control over the financial aspect of your project. Let’s start.

Labor and Materials

This is the meat and potatoes of the project, and likely the most expensive aspect of
the work you have to include in your project budget Excel template. To start with, you
want to use a work breakdown structure to separate these into line items tagged to a
specific task. This may seem like an unnecessary detail, but it’s not. Every dollar needs
to be accounted for if you want to reign in costs, so the more exact you can be the
better your expenses estimate will be and the closer your project will come in within
budget.

Now that you’ve broken down your project into the small tasks that make it up using the
work breakdown structure or WBS column, it’s time to assign a labor and material cost
to each. This is the money you’re going to spend on assembling the team responsible
for each task, the time they’ll take to complete it and the materials they’ll need for those
tasks. It’s a lot of work, but by doing it before the project begins, you’ll save yourself
headaches and over-expenditures.

Other Line Items

Of course, a project budget is not only labor and materials, even if that is the heavy
lifting. It’s important to account for every dollar and cent, and those smaller items—and
sometimes not-so-small items—are going to add up. Don’t let these costs break your
budget: find them and then collect them on your free Excel project budget template.
Travel

Take travel, for example. Your project budgeting template needs a column in which you
note when and if you have to travel, and then how much that will cost, including any
stipend. Maybe travel doesn’t plan in your project, but you need to consider it. Better to
have thought it through and dismissed it, than to have a cost come up in the midst of
the project that you’ve not accounted for.

Equipment

The same goes for equipment. You’re definitely going to have costs in this area.
Equipment costs can vary from very expensive heavy equipment to minor ones, but you
have to register those expenses in your project budget template in order to make an
educated guess of what the project is going to cost.

Fixed Items

There are fixed items, too, and there’s a place for you to collect them on the free project
budget template for Excel. A fixed budget item is one where the amount is set and
doesn’t change, as in one that is the same amount every week or month. There’s also a
column for miscellaneous costs, which are those that do not fit into any of the other
categories on the downloaded project budget Excel template.

Planned v. Actual Budget

The last part of your free Excel project budget template is the columns that you’ll be
most interested in following when tracking the project. It’s here that the spreadsheet
calculates the planned budget against the actual one or the real money you’ve spent for
that task. One column is your estimated budget expenditure and next to it is the money
that really went to completing the work, followed by a third column in which your
balance is noted. Here is where you can see if you’ve gone over- or under-budget.

How to Use a Project Budget Excel Template in

ProjectManager

If you’re ready to move on from a static Excel budget template to a robust project
management software, look no further than ProjectManager. It’s easy to transfer your
data over from the Excel sheet into the software. All you need to do is start a new
project and open up the Gantt chart project view.
Once you’ve started your project, you can transfer the info from your filled-out Project
Budget template into the Gantt chart manually. The same rules apply – just type in the
task names, the assignees, the planned hours, the project costs and so on.
Now that your project is filled out in ProjectManager, you can get to work tracking the
costs as your project progresses. That’s because the budget is updated as team
members complete tasks and update their status, giving you the most up-to-date
information. Then you can look at the budget for the project or even many projects
through the dashboard view. Think of it as an overview at-a-glance, but it’s also able to
drill down deep into the detail you need when you need it.
What Other Project Management Templates Can Keep
My Project on Budget?

The project budget template is a great tool to figure out how much your project will cost
and make sure that number is within the approved funding for the project. However,
there are other project management templates that can help you control costs and
manage areas of the project that can impact your overall budget.

Timesheet Template

Use a timesheet template to keep track of your team’s time spent on their tasks,
including cost per hour, vacation and overtime. Timesheets from past projects can help
you estimate your project budget based on how much time was logged for tasks in the
past. It also keeps an eye on your bottom line, showing how profitable your effort is and
providing clues to add greater efficiencies.

Work Schedule Template

Another way to monitor your labor costs is with a work schedule template. This
template lists your team and where they’re working, what time and what responsibilities
they have over the week or month. This information is crucial to working more
productively and managing costs. It helps you reduce resource costs, which makes
your budget go further.

Risk Tracking Template

Risk is always on the horizon of a project, threatening to impact your budget. A risk
tracking template collects those risks as you identify them and allows you to do a risk
assessment to rank their priority and then track them as your team resolves the issue.
Having a tool to manage risks as they arise in your project gives you the means to
control them and the costs associated with those risks.

We have many other project management Excel templates that you can use to manage
your projects.

Watch a Budget Tutorial Video

For more information on how to create and manage a project budget, watch the video
below. Jennifer Bridges, PMP, gives you a number of crucial tips that can help you get
the most out of your project budget template.

More Related Content

There’s more than a great software package available on the ProjectManager website.
We regularly publish a blog with articles and videos on project management,
leadership, and business concerns. Here are four that are relevant to project budgeting.

 Project Budget Proposal Template

 Project Documentation: 15 Essential Project Documents

 7 Steps for a Successful Project Budget

 6 Ways to Track Project Expenses

 Keeping Projects Under Budget

 7 Tips for Preventing Cost Overrun on Projects