So let's talk about financial and budget management.
So firstly in order to budgets you need to know what work is going to be involved.
So it's really important to gather the requirements correctly and have a good understanding of what
your stakeholders true needs and wants are.
This is done by firstly identifying the Motivational Drivers from your stakeholders and those can be
internal or external or competitive.
To really boil down understand what the motivations are for what the stakeholders need and what benefits
your program needs to deliver.
Once you've got a good understanding of that you will then look at the goals and objectives that need
to be created an objective could be we need to increase sales by 50 percent.
Then once you've got your objectives you can then look at the requirements which is what needs to be
done in order to reached or to meet those objectives.
And then finally once you've got the requirements you can actually look at the work that needs to be
done in order to meet those requirements and with the work understood.
You can then start to look out what it's going to cost to do that work and then create the budgets
you're going to want to report on the budgets and in order to do this you're going to have to create
some relevant key performance indicators to ascertain the spend versus the budget.
Here's some common key performance in key performance indicators for budgets.
Firstly looking at actual cost which is the actual cost of work performed.
Basically what's been spent to date.
You've got cost variance which is how much has the cost increased or been below prediction the Earned
Value.
So this is how much has been earned from the budgetary costs of work performed what's been earned to
date with the money that's been spent.
You've got planned value which is the budgeted cost of work scheduled meaning the budgeted cost of work
that is planned to take place in the future.
And then you've got return on investment which is have the benefits exceeded the cost therefore producing
a positive return on investment.
It's important to budget for unexpected costs and you're going to need contingencies for that.
So be realistic and being able to be realistic with cost income some experience.
Now you can use your own experience in this but also draw on other people's experience you might want
to talk to your stakeholders the program office of the program managers or you might want to talk to
your development team to get a good understanding of what work is needed to produce a certain delivery
and what that's going to cost.
You're going to make sure you need to make sure to refer to the risk management section of this course
because as always unexpected costs.
They're going to come from the risks you're going to have a better idea of what costs might come up.
If you've done a good risk assessment and understand the different mitigating factors for those risks
and what they might cost under you also know what's outside your control in order to plan for that as
well.
You want to vet suppliers so make sure that they are capable of delivering the promises that they've
promised.
You're gonna want to watch things like currency fluctuations economic changes and remember that the
prices you're paying for goods and services today might not be the same price that you're having to
pay in the future.
The costs might go up and you also want to make sure that you watch escalating costs by catching them
early and doing something about them before they spiral out of control
you're going to need to revisit review and re forecast your budget throughout the program and you're
going to want to make frequent budget oversights and spot any budget overrun as early as possible so
that it doesn't escalate.
You're also going to need to watch out for scope creep as well.
So you've got your requirements and you know what you need to deliver.
Now if the scope of your program creeps over time little extra bits of requirements might come in and
they might not seem like a big deal individually but over the period of the program if lots of new clients
have come in then it can make a substantial difference from what it was at the beginning.
So stick to the requirements and if there are any new increases in scope raised.
Change Orders for new additions to the program scope now will also probably come with a new budget as
well to help keep everybody informed and accountable for the budget.
So again this comes back to review and refocus.
Then you're going to want to do that yourself because it makes sure that you're on top of the budget
and you're keeping an eye on it.
But then you can also use it as an excuse to to inform everybody to your budget reporting and also make
the project managers accountable for their budgets as well to keep the budgets to make sure all the
council members are aware of the current budget status and remember an informed team is an empowered
team so they will likely they'll be more likely to watch their budget if you you're keeping them informed
of the program budget is going to prompt them to think about their budgets as well so that they are
more likely to watch their project changes and less likely to abuse their project budgets.
So reports in the budget regularly and this will force you to frequently review your budget and manage
it as well as of as.