Monday 24 January 2022

What is project revenue and expenditure management?

In service companies such as consulting companies, system integrator, software development companies, advertising agencies, and design production companies, cost management by project income and expenditure management is essential because labor costs account for most of the business costs. in this article, we will introduce the basics and methods of project income and expenditure management. in order not to fall into a situation such as "if the project is completed and you notice it, the deficit ...", please refer to it.

project revenue and expenditure management is the right time to understand the costs for each project in order to achieve the budget goals that you set at the beginning of the fiscal year. 


if you can't figure out the revenue and expenditures of an ongoing project until it's complete, project revenue and loss management is poorly accurate and can lead to deficit projects. the activities of project income and expenditure management are roughly divided as follows.

1. project income and expenditure plan

in addition to budgeting to start a project, plan for each project milestone. in addition to how much resources (people, expenses, equipment, etc.) are invested in the project, plan the expenditures generated for each business and the income generated for each milestone, and create a base for thoroughly managing the project balance.

2. maintain project income and expenditure

projects change like creatures, so making income and expenditure plans doesn't always go as planned. for this reason, it is necessary to devise and implement some measures to bring the balance that deviates from the underlying income and expenditure plan as close as possible to the standard.

3. improvement of project income and expenditure

if you spend less than you plan your project, you can generate profitable projects. in other words, it is important to increase the profit margin of each project through sustainable income and expenditure improvement activities. companies that have been able to thoroughly improve the project balance have no deficit projects and can generate a high profitous system.

the above project income and expenditure plans, project income and expenditure maintenance, and project income and expenditure improvement are based on the basic three principles of cost control. in other words, project revenue and expenditure is the same as managing costs related to a project.

three important points for project balance management

in thorough project income and expenditure management, it is important to accurately grasp the three elements of "budget", "sales", and "cost".

1. budget

many companies set a budget for the current fiscal year (sales target, profit target). when setting a budget, all projects starting during the fiscal year are not grasped, so the budget is budgeted by predicting labor costs from past sales performance, purchase performance, and personnel planning for the current fiscal year.

2. sales

when a new fiscal year begins, orders for achieving sales targets become active, centering on sales activities. when a new opportunity occurs, a quotation is created that accumulates subcontracting costs, material costs, expenses, and planned units according to customer requirements. when you agree the quotation terms and receive an order, the project starts. if this number of orders achieves your goal, you're more likely to be able to meet your quota.

3. cost

in addition to labor costs, such as outsourcing costs, material costs, and expenses, costs are incurred in projects. however, it is characterized by being able to grasp expenses other than labor costs to some extent at the estimation stage. on the other hand, labor costs are difficult to visualize, and there is a possibility that they will change greatly due to projects that have never been experienced before or specification changes.

it's safe to say that project revenue and expenditure management is all about accurately grasping these three elements. if you know exactly the three elements, you can manage your trusted revenue and expenditure information.

why project income and expenditure management is difficult while many service companies that drive project-driven businesses are working on project balance management, there are some challenging challenges. if you feel that project balance management is not done properly, you may have the following reasons:

information essential for project income and expenditure management is dispersed in order to grasp the income and expenditure of a project, it is necessary to accurately grasp information related to the project income and expenditure, such as sales, purchase, and expenses. 


however, many companies distribute this information within the company and are managed by multiple business systems. this takes extra time to gather information from each business system, and even if an abnormal project occurs, detection will be delayed, sometimes causing a deficit project. due to the fragmentation of the business system, managers take time and effort to collect information from multiple business systems for income and expenditure management, and there are disadvantages such as not being able to input actual results every day at the site.

There is an Excel sheet for management for each project, If you manage project planning and performance in separate Excel sheets, problems such as delaying planned changes to affected projects when a change occurs in the plan of a project. Delays in progress can result in deficit projects because project balances cannot be accurately managed.

poor freshness of actual input due to the large number of systems

if there are many business systems related to project income and expenditure management, the freshness of the actual input may deteriorate and accurate income and expenditure may not be grasped.

these are the reasons why project balance management is difficult.

systematization to thoroughly manage project income and expenditure
Systematization is essential for thorough management of project income and expenditure. Therefore, we recommend"SI Object Browser PM (PM)". It primarily features:

domain master

for each type of business, you can template 17-item processes in a project, such as processes and tasks, progress rates by process, and standard effort settings by function. when you register a new project, specifying a template sets the 17-item process into the plan, so you can quickly create a plan that is not nukemole by adjusting the plan for each project.

revenue and expenditure management by project

in the project profitability management screen, you can view project income and expenditure forecasts by accumulating actual costs and planned costs from the current month onward for contract amounts. although the plan changes due to specification changes after the estimate stage, the order stage, and the project is started, PM ensures that the project balance is always edd for the most recent plan by replacing the execution budget when the plan changes.

project list management

it can be displayed in the project list by company and department. if you create a cost overrun or progress delay threshold, projects that exceed this value can display alerts in yellow or red.

list of project income and expenditure by department

you can understand project sales, costs, and profits by project and month. in addition to projects that have been received, it is also possible to predict landing at the end of the fiscal year if you anticipate projects that are scheduled to be won in the future.

If you are aiming to thoroughly manage your project income and expenditure, please consider introducing SI Object Browser PM

No comments:

Post a Comment