sharyl butler

Resource Management

Technical vs. Financial – Making the Connection

Sharyl ButlerTechnical Manager

Kenesha StarlingFinancial Manager

Introduction Projects begin as a box of puzzle pieces with several team

members using their expertise to fit the pieces together Two of the most critical pieces are the technical requirements

and the resources needed to meet those requirements Traditionally, the link between the Technical and Financial

manager is not very strong

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Changes to traditional behaviors are needed to strengthen this link

Behaviors (Traditional)Technical Manager Provides work requirements Determines skill mix required to meet requirements Determines work done by contractor vs. civil servant Manages travel requirements Manages performance of contractor/civil servant Major focus is on technical requirements Fully dependent on Financial Manager for financials

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Behaviors (Traditional)Financial Manager Manages all phases of budget; formulation and implementation Recommends resource allocations based on funding, priorities and needs Designs, develops and interprets financial statements for Technical Managers Interprets agency and center financial regulations and policies Assures that financial accounting practices are maintained Major focus is on funding requirements Fully dependent on Technical Manager for task knowledge

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Why change what we are doing today?

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Shortcomings of Traditional Behaviors: Problems Encountered

Scenario A: Technical Manager (TM) directs COTR to authorize additional hours for contract X in order to incorporate additional high priority requirements from program Y but fails to communicate this to the Financial Manager (FM) · Problem: Contract overruns because TM failed to

communicate new requirements to FM and no additional funding was available

· Problem: Unplanned workforce reductions and other planned tasks were cut in order to get the task back on plan

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Scenario B: Program Y informs the TM that the schedule for task Z slipped to the right because of necessary redesigns. Therefore, the TM tells the COTR to direct contractor X to focus on several other high priority task for program Y causing them to burn available hours and overtime thus increasing costs. On the other hand, the FM asks the COTR to direct contractor X’ s business manager that the slip is unfortunate but timely because of overrun trends so they should use this time to focus on other areas. · Problem: Because there was a lack of communication between

the FM and TM and conflicting/inconsistent direction given either an unplanned request for additional funds will be needed or unplanned layoffs will be necessary.

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Scenario C: FM receives monthly financial statement for contract X and notices they have been burning at a higher hourly rate than planned. The FM decides they will observe this a few months longer before bringing it to the attention of the TM. Six months go by and the FM finally mentions this to the TM. · Problem: In order to complete tasks originally agreed upon,

the TM must make an unplanned request for funding increases because of the FM’s lack of communication about financial issues and forecasting

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Scenario D: During a technical, cost and schedule review (TCSR) the TM recommends to Program Manager Y that additional funds be provided to cover costs for additional hours needed to complete task X on time. Program manager Y questions the TM because earlier that morning, the FM briefed him that task X was under running and if no additional tasks were needed $100K would be returned to the program. · Problem: Because the TM and FM didn’t tag-up prior to the TCSR,

Program Manager Y begins to question the integrity of the data received from both because of the inconsistency. They are sent away to create a cohesive story and provide a combined recommendation in a week. This leads to conflict between the TM and FM as they both feel the other “threw them under the bus”.

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These are serious problems! How do we overcome them?

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Changes to Traditional Behaviors That Work

Transparent and timely communication between Technical and Financial manager is required

Develop a trusting relationship between technical and financial managers· Open dialogue · Sharing of confidential information

Technical manager shares technical requirements and priorities with Financial manager

Financial manager analyzes cost impacts and recommends options to maintain funding levels

Both managers assure that approved changes to the baseline requirements are reviewed and assessed for

budgetary impacts11

Changes to Traditional Behaviors That Work (con’t)

Managers work together to develop options for addressing budget and resource issues

· Research cost saving methods· Use “yes, if…” terminology, instead of “no”

Joint development of regular project Technical, Cost and Schedule Reviews

Basic knowledge transfer· Terminology (NOA, WADs, etc.)· Schedules (PPBE, milestones, etc)

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Final Words The link between Technical and Financial management is

critical to a project’s success Frequent communication between the Technical and

Financial manager is crucial throughout the project’s lifecycle as technical and funding requirements are often dynamic

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Suggested Training Crossing Department Lines Finance for Non-Financial Managers Essentials of Project Management for non-Project Managers Project Control: Fundamentals of Overhead and Other Indirect Cost Appropriations Law Business Education Program JSC CFO University courses Mentoring from technical/financial experts

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