Traditionally, program and project manager’s focus was to bring a project in on time and within the organization’s budget. In today’s changing environment, the scope is broader. Organizations have become program and project based hence these managers are becoming financial savvy.

Program and project are therefore on time, on budget and at the same time contribute to shareholders’ value and the long term financial success of their organizations. Now more than ever, program and project manager have to keep in mind their organizations’ financial perspectives-their organizations are more than the sum of the programs and projects in which they invest in.

 

Generating positive returns

Organizations are likely to engage in programs and projects whose Return On Investment (ROI) meets or exceeds the Weighted Average Cost of Capital (WACC) with an aim of producing a positive return out of the programs and projects. The cost of equity is the risk premium associated with the shareholders’ investment in the organizations.

This therefore means that sound business management should be applied across all organizational programs and projects. This should include sound financial and business analysis in program and project selection, thoughtful financial and business reasoning in the planning phases and judicious financial and business management as important elements of controlling and executing all programs and projects.

The program and/ or project selection is imperative, much before an organization can undertake a feasibility study. The analysis that leads to the selection should be refined and amplified as the program or project planning process uncovers more information. The program or project plan then becomes a better guide for managing the program/project as a total enterprise rather than an isolated piece of work separated from its outcome.

 

Shareholder Value

ROI matters to shareholders hence financial prudence is crucial throughout the program or project management process. Programs and/ or projects are instrumental in creating shareholder value. Organizations that create more shareholder value are more productive and the numbers of employees grow faster than in organizations that create less shareholder value.

At a higher levels, shareholder value has been linked to overall economic performance. This means that sound business management should be applied to all organizational programs and projects.

To ensure the success of program and/ or projects, it’s a good idea to always consider the alignment of the your organizational strategy with the program or project and the projected final outcome. One major challenge with transitioning from concept through to implementation is simply lack of clearly defined goals and objectives. It’s therefore important to clear this out before the commencement of the program or project. Further, having the entire program/project team understand the vision and the strategic decision contributes to the success of program/project implementation.

The fundamental question for any program/project managers is therefore to understand why finance matters in their implementation which coupled with a business-oriented program or project plan, the managers can then better execute and control the program or project with an end in mind. And that end being to optimize Return On Investment for increased shareholder value.