Being a successful project manager (PM) is a difficult business. There are a number of separate and distinct strands that a strong PM needs to pull together for the overall benefit of the project in hand. First and foremost they have to be a leader, able to galvanise and motivate their team to reach their full potential in pursuit of a specific goal. In addition to this they need to be strong organisationally with an ability to marshal disparate elements of the project so that no area is left ignored or undercooked.

Whilst many project managers are experienced and comfortable with these demands the question of financial planning is one that overwhelms many an aspiring PM and scuppers an otherwise well organised project.

If a successful project can be boiled down to ensuring the balance between time and budget then budgeting is often the area that lets the whole task down. Whether it is an inability or an unwillingness to grapple with the key financial issues many project managers end up making rudimentary errors that could be easily avoided if due care was taken from the planning stages of the project.

Too many PMs do not take a long term view financially. The production of cash flow statements and balance sheets are essential practice for any project but they are primarily concerned with the here and now and the current progress of specific aspects of the task. Forecasting the future of the project is just as vital as only then can you adequately gauge how long your resources will last and whether or not you are devoting the correct amount of time to certain areas of project. Remember that the balance sheets and cash flow statements all feed into the long term project budget.

So what form should these forecasts take? The most important thing to consider is to make them realistic and flexible. Working from previous data is useful but nothing remains static so remember to factor in any changes and alterations that have occurred between the time that the previous data was taken and the present moment. It is crucial to account for any potential setbacks or complications that are impossible to foresee from the outset. The worst course of action is to blithely assume that everything will run to plan and only budget for that rose-tinted eventuality. Nothing in business ever runs perfectly smoothly, no matter how well planned.

Of course budgets are only useful if they reflect the reality of what is occurring in the real world project. It is essential to constantly examine the budget alongside project developments and make any alterations to the budget that is necessary. Given the constant need to update cash flow statements and balance sheets it is easy to set the overall budget to one side. But even though it may be tempting to do this it is fatal as without frequent revision of the budget costs will spiral dangerously out of control and jeopardise the success of the entire project.