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Tracking Projects Through Project Management and Financial Statements

June 23, 2012 | Comments: 0 | Views: 166

Without project management, projects would not be completed in a timely fashion or not be completed at all. The amount of planning that goes into projects can help achieve the project goals. Project management oversees the project leaders and also controls resources that are used in the project. A project is defined as a temporary event that has a beginning, an end, and several constraints. These constraints could be scope, time, and budget. A venture is considered successful if it is completed in the allotted time and achieves all of the goals and objectives assigned to the project.

Project management follows a series of steps to complete the task. The first step is initiation. In this step, the nature and the scope of the tasks are defined. When discussing projects in this stage, project managers should try to identify any potential problem areas and find ways to correct them. They will be able to find them when they cover the list of operations that will occur for the project to meet business requirements. In this stage, they will also look at the budget to make sure it is consistent with operations and resources. The project charter will be developed which will summarize the schedule, costs, and the finished product. After initiation, the team must look at the design of the job. This stage allows the team to plan, in detail, how the project will run. They will develop a schedule, budget, and plan for risk. Teams that are involved with designing the finished product should be included in this step. They can assist with production activities.

The third step is executing the plan to produce the project deliverables. During execution, the team should monitor and control each of the processes. This is the fourth step, which overlaps with the third. The project manager will oversee the ongoing tasks and make sure they are consistent with the constraints of the project. This process will continue throughout completion of the tasks so errors can be fixed and prevented. This also allows project managers to change processes to adjust the scope of the job or make changes to the finished product before it is completed. The end of the project is identified by an acceptance of the finished project.

Projects would not be completed without careful accounting. It can also be referred to as job cost accounting. Project accounting is the process of tracking projects through their financial statements. Managers look at the financial statements in the monitoring and controlling step of project management. This will tell them if the venture is on track to meet the financial constraints and will also be able to tell them if it is being completed on time. The total cost of the project is made up of the direct costs and the overhead costs associated with completing the job. Using job cost accounting allows managers to assign certain costs to each project task. This allows managers to see exactly where costs are being allocated. It is extremely important when managers are benchmarking a current project with a previous project. They will be able to see if the current project is operating more favorably than the previous one. Current progress can also be compared to what was planned for the project to determine if it is using more or less of the budgeted amount than was planned.

The schedule of costs is directly impacted by the tasks. The capital budget includes direct costs and manufacturing overhead, which can change depending on the project. A large part of project costs is made up of direct labor costs. These are directly related to the employee timesheet that is being completed. The data from the employee timesheets is also used to help track the project. The budgeted direct labor costs can be compared to the actual time being submitted by the employees. Any variances can be evaluated to determine if the project is on time or not. Then, project managers can determine if they need to speed up production to stay on task. Direct costs are related to the overall project completion time. The project manager looks at the percentage-of-completion to see if it is on time and within budget. This is an overall picture of the tasks that includes all of the information. It is very helpful to assess the project and compare it to historical and current budgets. Planning and monitoring are very important to project management and should be utilized throughout the entire process.

Source: EzineArticles
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