Project financial management

Effective financial oversight for project success

A project manager’s success hinges on their ability to deliver outcomes according to two crucial criteria: quality and cost. To hit the bullseye, the project team must achieve its goals according to the project plan and within budget, resulting in a maximized return on investment.

Controlling a project’s fiscal resources is a rigorous process that goes beyond establishing a budget. It requires ongoing financial oversight – an approach that monitors expenditures in real time, engages in strategic planning, and establishes risk management procedures.

That’s a lot of work, but financial management tools (like Tempo’s Cost Tracker) can help. Here’s how to manage a project’s assets and safeguard its financial stability, ensuring your team delivers on its strategic goals without blowing the budget. 

What is financial oversight?

Financial oversight monitors , ensuring the cost of attaining strategic objectives doesn’t exceed the established budget. Budget oversight allows the to safeguard available assets, optimize financial performance, and prevent or detect potential misuse of funds. The process also provides visibility into financial relationships and transactions, fostering transparency, accountability, and alignment with project goals.

Together, these actions ensure the financial health and sustainability of the project.

Core elements of financial oversight

Project managers oversee these five components to guarantee financial stability:

1. Budgeting

The first step in establishing financial oversight is setting the project’s budget. During the planning phase, the team develops a fiscal blueprint, outlining the costs of assets required to deliver the project’s outcomes, including:

• Labor

• Materials

• Equipment and technology

• Overhead

2. Financial planning

Based on financial data from previous activities, the project manager can forecast the fiscal performance of the current initiative. These insights inform decision-making and help the team anticipate additional expenses and revenues.

3. Financial risk management

Data from past projects also helps identify potential financial risks. The project manager can use historical information to develop and implement mitigation strategies that safeguard financial assets and prevent cost overruns.

4. Expense tracking and categorizing

To ensure work remains within budget, leaders review and manage expenditures throughout the project’s lifecycle using various digital solutions. Financial monitoring applications include:

• Spreadsheets

• Accounting software

• , like Jira

• Real-time fiscal monitoring tools, like Tempo’s

These tools also facilitate compliance with regulatory and government policies, providing audit committees with the analytics necessary to evaluate adherence.

5. Financial reporting

Project managers are also responsible for communicating budgetary health to stakeholders. Financial management reports provide data outlining the fiscal health of the project and factors contributing to its current state. With these insights, managers can adjust the budget or project plan and mitigate the effects of financial pressures.

How to create financial oversight

Once a project manager determines a budget, they must implement checks and balances to oversee and control team spending. Financial oversight comprises the following activities:

1. Defining roles: If the team is divided into smaller working groups, assign financial oversight responsibilities to a member with the required expertise. Separating financial duties ensures no one person has unchecked control over the project’s budget, reducing the risk of discrepancies and misuse of funds.

2. Implementing financial controls: Establish policies and processes to approve expenditures and prevent or detect accounting errors and fraud.

3. Creating cash flow statements: Schedule expected expenditures and maintain a process for overseeing and assessing spending. Accurate financial monitoring illustrates cash influx and the team’s use of available funds.

4. Maintaining transparency: Use cash flow statements to illustrate project spending and revenue data as part of a regular stakeholder reporting and publication schedule.

Long-term benefits of financial oversight

A rigorous financial oversight process does more than ensure a project manager delivers work within budget. Additional advantages include the following:

• Better decision-making: Financial oversight provides an accurate view of the project’s fiscal health, which allows stakeholders to make informed decisions about future strategies.

• Decreased project risk: Reviewing financial data from past projects helps identify financial risks. It provides insights that prevent cost overruns or incorrect billing while informing mitigation plans for future initiatives.

• Improved resource management: Financial oversight ensures critical tasks receive the necessary resources and funds to produce the project’s required deliverables. 

• Enhanced bottom line: A financially healthy project reduces capital costs over its lifecycle, improving profitability and return on investment. 

• Organizational growth: When projects remain under budget, the company can avoid dipping into its financial reserves, instead using those funds to fuel innovation and growth strategies.

• Increased corporate revenue: Delivering a project within budget ensures a positive return, increasing the company’s overall revenue and profit.

Real-time cost tracking and forecasting for financial oversight

Spreadsheets and accounting software are reasonable financial management and oversight methods, but they still rely on manual labor to input data and perform calculations. This approach risks errors that compromise regulatory compliance and budgetary stability. 

A comprehensive financial oversight solution – like Tempo’s Jira-integrated Financial Manager application – incorporates automated, real-time reporting into the process. This minimizes opportunities for error and ensures compliance. 

In addition, real-time tracking allows project managers to perform the following functions:

Monitor costs in real time

Real-time cost tracking provides visibility into project spending as it occurs. If the team overspends, project managers can step in and adjust the budget, preventing the escalation of financial issues.

Forecast cost trendlines

Project managers can use financial data gathered by the application to predict future spending rates and estimate whether the budget is sufficient to fund the remaining work. If not, they can divert funds from nonessential tasks to more strategic activities or seek additional capital from stakeholders. 

Make informed decisions

Up-to-date information lets the project manager and stakeholders make data-informed decisions. This valuable info reduces a project’s financial risk, sustains business growth, and improves outcomes.

Improve financial health with accurate reporting

With real-time reporting, stakeholders have accurate data that provides visibility and insight into the company’s financial management practices. Suspicious spending patterns and waste are easily identified, allowing leadership to act swiftly and safeguard the company’s assets. 

Maintain financial oversight with Tempo’s Financial Manager

Financial oversight responsibilities are vitally important, but they don’t need to be laborious or stressful. Tempo’s application integrates into your Jira tech stack to relieve project managers of this burden so they can focus on delivering ideal outcomes. 

Financial Manager delivers real-time financial data directly to the user’s dashboard. It provides instant insights and streamlines stakeholder report generation. With Financial Manager, leadership has everything it needs to control costs and expenses across the entire . Budget overruns don’t stand a chance.