How we got a grip on project finances to ensure that suppliers got paid.
- Pragmatic PMO was engaged to support a multi-million pound programme about to enter implementation.
- The programme had no financial mechanisms in place.
- Some suppliers were owed more than £300k, and payments were overdue by as much as 8 months.
- The brief from the Programme Director was simple:
- “I just need you to get a firm grip on the programme finances so I know what’s going on and so that suppliers get paid before their patience runs out and they walk off the job!”
- We gathered information on approved project budgets and actual costs recorded on the Finance system.
- We gathered information about the Client’s purchase order tool, quotes received, orders raised, work undertaken and therefore money owed to each supplier.
- We increased transparency by building a spreadsheet model to track budgets, forecasts, orders raised, expenses incurred against each order, and therefore committed amount remaining on each order.
- We enabled projects to deliver by getting their suppliers paid as quickly as possible (prioritising the largest amounts owed for the longest, to the suppliers most crucial for the project’s delivery)
- Secured predictability of delivery by bringing supplier payments up to date, and enabled control of project finances by providing the Programme Director a clear view of Actuals to date, Estimate to Complete, and Estimate at Completion.
- Using this approach, in one client avoided >£100k expenditure from duplicate invoicing, and in another client identified and avoided a >£1m cash flow shortfall due to funding later project stages from reimbursement of early project stages.
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