The Project Financial Management Process is followed after the initial project budget has been documented and approved during the Project Initiation phase of the Project Management Life Cycle.
What is a Financial Management Process?
A Financial Management Process is a method by which costs (or expenses) incurred on the project are formally identified, approved and paid. Typical types of costs include:
- Labor (staff, external suppliers, contractors and consultants)
- Equipment (computers, furniture, building facilities, machinery and vehicles)
- Materials (stationery, consumables, building materials, water and power)
- Administration (legal, insurance, lending and accounting fees).
The purpose of the Financial Management Process is to record actual financials (or expenses) which accrue during a project's lifecycle. Project financials are formally documented through the completion of the Project Expense Form.
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When to use a Financial Management Process
The Financial Management Process should be initiated after the expected Financial Expense Form has been created and approved during the Planning phase of the project. This process provides a mechanism for monitoring and controlling the actual financials of the project against those that were originally planned/budgeted. It important to formally track expenses throughout all phases of the project, otherwise, it may become impossible to accurately manage the project constraints of time, budget, and quality.
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