Monitoring & Analyzing Project Costs: PMBOK+PLUS Tools & Templates to Facilitate Financial Analysis

By Dr. Kenneth Smith, PMP

The traditional financial management practice of assessing Project Cost Performance by comparing ‘Burn Rates’ vs cumulative baseline budgets is fatally flawed; resulting in erroneous assessments most of the time!  This is a shocking assertion and situation — to say the least – deserving of further explanation; and even more importantly, Rectification.

The ‘root cause’ – to cite a contemporary catchphrase — is because the traditional practice is only valid for analyzing PROJECT expenditures when Projects are ‘On Schedule;’— which is not very often.

 Indeed, during implementation, changes in both work accomplishment rates and related costs are frequent, and thirteen (13) possible combinations of work performance vs. the project schedule, budget and actual cost exist.  Of these 13, only three are when the project is ‘On Schedule.Thus, in most situations (77%), traditional financial analysis reports ‘False Positives,’ ‘False Negatives’ or incorrect amounts!

For the full article click here in PM World Journal, Volume XI, Issue VI June 2022

For more information contact Dr. Kenneth Smith