PricewaterhouseCoopers LLP reports over 1/3 of corporate projects are abandoned before completion. Andersen Consulting reports that average cost overruns for software projects are 100 - 200%. And it’s usually the Finance department that has to decide whether to pull pull the plug. Involvement early and often can mitigate disasters. Successful project management isn’t magic. It requires discipline, perspective, and common sense.

Finance’s Role

Finance should be asking whether the ROI outweighs project risks and should work closely with project managers in more than a budgetary oversight role, serving as bottom-line consultants and bringing perspective to the project

Financial Discipline

Good numbers are the starting point project viability analysis. What are the costs, resources, dependencies, etc.? Finance can provide the expertise to do an effective financial analysis and set up a mechanism to monitor costs and benefits to eliminate the element of surprise.

Long-Term and Big-Picture

But its about more than the numbers.they are just one factor in determining the success of a project. Finance managers can help consider what will the project do for the company, how will it affect the corporate business model and help understand the intangible consequences of a project.

Project Pitfalls

Financial involvement is not a magic wand - projects can still fail. Some common pitfalls include not focusing on how the project will impact the organization, lazy budgeting and allowing projects to continue to deteriorate.

Kill or Continue?

How do you know when to pull the plug? Cost overruns might be justified, forces that increase project costs can also increase a project’s benefits. Evaluating projects is not about costs, its about worth. A lot of time and effort goes into projects and even when the numbers no longer add up, it is difficult to put the brakes on the project. It’s often up to finance pull the plug.

The following signs that a project is in trouble: