Primavera and Financial Systems

One From Venus And One From Mars

Both Primavera and the Financial Systems need each other in a projects based organisation. Primavera aims to support the needs of the Project Management community, whereas Financial Systems go to the heart of the Financial Accounting community.  Confusion often occurs as there is some overlap in functionality between Primavera and Accounting software, and the two worlds often use the same words to mean different things. However, they are complimentary and organisations fair better utilising the strengths of each:

• Primavera plans the work.  A Financial System records the costs.
• Primavera is used to evaluate options. A Financial System is used to control funding of projects.
• Primavera uses work, resources and dates to predict cost.  A Financial System assigns cost to work, resources and financial periods
• Primavera is about the detail of performance measurement baselines and work achieved.  A Financial System is about the summary of funding and costs.
• Primavera focuses more on the future to predict what will happen, whereas a Financial System focuses more on the past and is the system of record to account for what has taken place.
• Primavera represents the view of a Project Manager and a Financial System represents the view of a Financial Accountant.  The information they use and generate is passed backwards and forwards until agreement is reached.

What Matters To Primavera?

Primavera aims to support the operation of the project on a daily basis.  It has to cope with evaluating options at a daily management level which is mostly way below the level at which the Financial System cares about.  Sometimes the Project Manager can change the plan quite dramatically in terms of sequence and deployment of resources, but when it is rolled up to the cost collection of the Financial System, the change van be hardly noticeable.  The primary focus of the Project Manager is to get the work done on time to the nearest day and within budget.  It emphasises the work to be done and the likely cost of that work.  Delivery performance matters.

What Matters To Financial Systems?

A Financial System is concerned with ensuring there is enough real money in the bank to pay for the projects being run.  It is concerned with the actual cost of projects compared to the budget of both the project and the organisation as a whole.  It has little concern for the sequence of activities and the availability of resources.  The primary focus of the Financial Accountant is to get the work done within budget and on time to the nearest financial period.  It emphasises the actual cost of work, the availability of funds and the controls for the release of those funds.  Fund management matters.

How Can The Same Project Be So Different?

Project Alpha can finish two weeks late according to the Project Manager, but still be on time according to the Financial Accountant so long as the Actual Finish Date is in the same financial period as the Budgeted Finish Date.  On the other hand Project Beta can be ahead of schedule and doing well according to the Project Manager, and as a consequence is spending over budget according to the Financial Accountant.  Yet another Project Gamma could be late and over spending according to the Project Manager, but is on budget according to the Financial Accountant. Project Gamma has taken 6 months to do what was planned to be done in 3 months and has spent slightly less than the original budget for the first six months.

Needing Each Other

In a properly functioning business Primavera and Financial Systems need each other. Cost, Schedule and Technical Performance information is integrated to provide a complete picture. Information from both is required to see clearly and allow executives to adapt strategy to an ever-changing business world. Most of all, people can understand the numbers, interpret, evaluate and take action on what they are being shown.
 
Primavera is about working the plan and the Financial Systems are about accounting for cost.  Only together can they be used to evaluate the cost of working the plan to the organisation.  At that point, Executives can decide if a project is worth continuing and how it is contributing to organisational goals.

Robert S. Kaplan, who along with David Norton, developed the Balance Scorecard method, remarked “You can’t drive a car solely relying on a rearview mirror.”. A Financial System mainly looks through the rearview mirror and Primavera mainly looks through the windscreen. With the risk of sounding like a cliche, the whole is greater than the sum of the parts.