Effective Project Management

Section H Accounting

To an actuary, accountancy is exciting!

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1 Looking after the Finances

1.1

Get the right people; see Section D, Mobilization, paragraphs 1.1 to 1.5. This will be one of the smallest groups, possibly only one or two people. With the right person, you can leave them to get on with their job, and they will give you the right information when you ask for it.

1.2

Ensure that the accounting procedures are thorough and conform to the contract and/or letter of ‘intent/instruction’ so that there are no delays in invoicing the owner or in making payments that are due. If you start work on a letter of intent, you do so at your own risk. With an instruction, you can get paid!

1.3

Ensure that any advance funding is invoiced without delay. Since this is the first payment on the project, it may not be a good example of how long it takes for payment.

1.3.1

Issue a normal invoice as soon as possible to discover how long it takes to be paid. Adjust the date for issuing invoices accordingly. For example, if payment is due at the end of each month, you do not issue the invoice then. The invoice should be issued on say, the twentieth of the month (assuming it takes the client ten days to approve and make payment). Performing a net present value (NPV) calculation (see Part V, Section G Financial Appraisal) demonstrates that the project can contribute additional margin to the bottom line. The invoice issue date can always be amended later as ...