I was recently asked how PRINCE2 could assist Financial Controllers in their role.
As a project management tool PRINCE2 does not illustrate how financial management tools operate, though it explains the importance of these tools in respect to the financial control of a project.
Earlier this decade in the advent of a series of corporate accounting scandals a succession of corporate governance legislation were enacted (most famously the US Sarbanes-Oxley Act of 2002). These statutes enhanced financial standards by which boards, management and accounting firms must comply with. It is widely recognized by industry experts that PRINCE2 (PRojects In Controlled Environments) is an effective method for the management of projects and aids organisations in their challenge to comply with requirements set out in recognized governance standards such as the Sarbanes-Oxley Act, CLERP 9 and other corporate law.
Today financial professionals are required to adopt a broader role in their organization assuring compliance to corporate financial governance standards. To be effective in their role financial professionals must become knowledgeable in best practice standards such as PRINCE2 to ensure their organization is effective in the operation of internal controls relating to significant investments and projects.
PRINCE2 explains the processes required to control projects and equip delegates with knowledge to appropriately audit the value of a project and the effectiveness of controls including financial tracking and reporting processes.
Increasingly financial professionals are adopting a role which PRINCE2 refers to as Project Assurance. Throughout the project this role is responsible for advising senior management on the value of an individual project and the adequacy of its performance controls.
In today’s challenging environment financial professionals are also an integral part of corporate committees responsible for assessing which projects the organization should continue to invest in.
PRINCE2 demonstrates:
- The importance of a project Business Case
- How a Business Case should be prepared and managed throughout its life
- How to assess the ongoing viability of a Business Case
- Where to establish key decision points in a Project Plan
- When & how the Business Case should be reviewed
- Project budget inclusions
- Key project documents important for compliance and auditing purposes
- An approach to assess the most cost effective project delivery model
- How to set a financial control and reporting framework for projects
- The importance of risk budgeting and its application in a project environment
- The application of Change Control and use of Change Budgets
- How to apply cost tolerances to facilitate Management by Exception
- Project Planning and estimating approaches.
In summary PRINCE2 provides projects a governance framework and aids with compliance to enhanced corporate governance standards. It is important for Financial Controllers that their organisation’s projects follow a consistent approach for planning, estimating and reporting. By not applying standardised and robust project management process the true performance of an organisaton’s portfolio of projects may never be known. Financial Controllers have a special interest in that projects are appropriately governed to assure their success and their outputs produce a return on investment.
PRINCE2 is an internationally proven method that offers consistency in approach and best practice project management, improving the chances of success and better outcomes.