John Chapman, Programme Director, Touchstone Ltd

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• John Chapman, Programme Director, Touchstone Ltd
• Programme and Project Accounting

I often say that when you can measure what you
are speaking about, and express it in numbers,
you know something about it but when you cannot
measure it, when you cannot express it in
numbers, your knowledge is of a meagre and
unsatisfactory kind it may be the beginning of
knowledge, but you have scarcely in your thoughts
advanced to the state of Science, whatever the
matter may be. Lord Kelvin
www.touchstone.co.uk
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Project and Programme Accounting

• John Chapman
• Programme Director
• Touchstone Ltd
• www.touchstone.co.uk

www.pmtoday.co.uk
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Agenda

• Financial Accounting v Project Accounting
• The Challenge in designing a system
• Designing a system
• Management Benefits
• Close Questions

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Exciting Jobs
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Financial Accounting versus Project Accounting
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Financial Accounting versus Project Accounting
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The Challenge

• No accountant on many projects
• There are a portfolio of projects to run with
  budgets and actual values to track
• Little guidance available on how to design and
  setup a system to look across projects
• Move from anecdotal examples of Project
  Accounting to a repeatable approach

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The Challenge

• Project Managers have limited accounting
  knowledge and no desire to consider other
  projects.

• Financial Accounting requirements do not meet the
  needs of Project Programme Managers

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The Challenge

• To bring the disciplines of Financial Accounting
  to the recording of Programme and Project Cost in
  a way that can be analysed to provide meaning
  management information
• By Project
• By Programme
• By Portfolio of like type projects
• Metrics on expected costs / resource requirements

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A supplier invoice example
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The Maintenance Fees Example
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What the Board sees in the accounts
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The Challenge

• Is that enough of a challenge?

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Name this Hotel
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Name this Hotel
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Where to start?

• Look at other industries
• Is there comparative analysis in a consistent way?

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Where to start?

• Define terminology
• Agreed coding structure
• Provide a common method of analysing income and
  expenditure i.e. Project Programme Costs
• Standard reporting formats

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Designing a system
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Terminology and Semantics
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If it looks like a duck, and quacks like a duck,
we have at least to consider the possibility that
we have a small aquatic bird of the family
anatidae on our hands
Douglas Adams
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1. http//www.brainyquote.com
2. http//www.brid.ab.ca/Images/mallard1.jpg
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Terminology and Semantics

• We need to be clear on what is meant by
• A Programme
• A Project
• A Portfolio of Projects

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What is a Programme?A Programme of Business
Change
Adapted from A Guide to Programme Management,
CCTA
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What is a Programme?A Portfolio of Projects
Approach
Adapted from Programme Management Demystified,
Geoff Reiss, ISBN 0419213503
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What is a project?
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Designing a system

• Develop our terminology
• Agree that there are common types of projects
• Link Project Planning to Data Capture
• Develop a common repository
• Store data in a consistent way

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Designing a system

• Who wrote?
• The 7 Habits of Highly Effective People

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Designing a system

• Begin with the end in Mind
• Stephen Covey
• The 7 Habits of Highly Effective People

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Designing a system
Managing Successful Projects with PRINCE2. CCTA,
ISBN 0-11-330855-8
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Designing a system
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Designing a system
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A Common Repository What we expect
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A Common Repository What to consider?Timing
and standard costs per employee
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A Common Repository Structuring Data
This is where we are trying to gather data Main
costs are people
Consistent budgeting planning
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Designing a system

• We run a Stage of work
• We uses phases to create definable entities
• It makes it easier to control and resolve issues

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Budgeting, Project Planning, Gathering ActualThe
Project Plan Touchstone Example
Time recorded at this level of granularity
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Budgeting, Project Planning, Gathering ActualThe
Touchstone Example
From the Project Plan
From the timesheets Captured at source by phase
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Budgeting, Project Planning, Gathering
ActualCoding Structures Touchstone Example
Coding structure
Stage 01
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Budgeting, Project Planning, Gathering
ActualCoding Structures Touchstone Example
Phase to Align with Project Plan
Suffix is standard Across like type projects
Product
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Designing a system
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Where to start?

• Take a common project type, e.g.
• A standard system upgrade
• Define your phases in stages
• Develop a template project plan
• Develop a template status report
• Define the coding structure in your time
  recording system
• Educate the Project Managers, Project Office and
  Resources in this holistic approach from
  planning to data capture

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Upgrade Project Plan extract
Time recorded at this level of granularity by
Phase
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Status Report for Upgrade Project
We can analyse utilisation
Time recorded at this level of granularity
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The Benefits of this approachAnything that is
wasted effort represents wasted time. The best
management of our time thus becomes linked
inseparably with the best utilization of our
efforts. Ted W. Engstrom
1. http//www.brainyquote.com
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Improving Performance

• Activities are grouped into phases which align
  with skills.
• For example, s/w installation is a different
  skill from design

• Analysis across multiple projects could highlight
  a common skills issue
• Management effort can be focused in resolving this

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Selling the Benefits

• Board of Directors
• Programme Directors
• Programme Managers
• Portfolio Managers
• Project Managers
• Project Team

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KPI Project Reporting

• Analysis of time by Runner / Repeater / Stranger
  Governance
• Non-Conformance by Phase / Stage Cost reduction
  Profit

Director
Analysis by type of work (Phase Stage).
Metrics on Time to Do
Portfolio Manager
Programme Manager
Programme and Project Reporting Actual versus
budget by Stage
Specific Project Analysis with prior metrics to
assist in project planning and budgeting
Project Manager
Employee
Analysis of the work done, and link to skills
required
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Budgeting, Project Planning, Gathering
ActualMetrics Consistency Touchstone Example

• Cross Project Reporting

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Budgeting, Project Planning, Gathering
ActualMetrics Consistency Touchstone Example

• Cross Project Reporting
• Tells us that the project can take from 18 to 38
  weeks
• Manage the expectation with the client
• Manage the risks in estimating days
• Too many days and the organisation is not
  competitive
• Too few days and it is under quoted and not
  profitable

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Budgeting, Project Planning, Gathering
ActualMetrics Consistency Touchstone Example

• Cross Project Reporting
• Understand the likely financial exposure
• Demonstrates that we understand our business
• In the previous example we can indicate early on
  when we expect the system goes live.
• This links through to the benefit realisation

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The Elevator Presentation
60,000 of financial savings, 5 improvement in
productive time, focus on non-conformance,
improvement in our estimating capabilities,
standardised KPI reporting all of which are now
possible due to the information from our
comprehensive programme and project accounting
system.
What we say
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The Elevator Presentation What they hear?
60,000 of financial savings, 5 improvement in
productive time, focus on non-conformance .
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• Thank you

• John Chapman
• Programme Director
• Touchstone Ltd
• Tel [phone]
• www.touchstone.co.uk

www.pmtoday.co.uk
I would be pleased to come and talk with you
further about this. If you would like copies of
the slides, the example upgrade plan and status
report Send me an email john.chapman_at_touchstone.
co.uk