Page 86 - DCAP304_DCAP515_SOFTWARE_PROJECT_MANAGEMENT

Software Project Management

Notes communicating than on the other project management activities we described (e.g., allocating
resources, ensuring adherence to schedule, budget, etc.).
At the top of the program management hierarchy are the program sponsor(s) and the program
steering committee. Their main responsibility is to own and oversee the implementation of the
program’s underlying business and IT strategies, and to define the program’s connection to the
enterprise’s overall business plan(s) and direction. Their management activities contain providing
and interpreting policy, creating an environment that fosters sustainable momentum for the
program (i.e., removing barriers both inside and outside the enterprise), and occasionally reviewing
program progress and interim results to ensure alignment with the overall strategic vision.
These individuals receive periodic summary reports and briefings on funding consumption,
resources and their utilization, and delivery of interim work products and results. Typically,
they will focus on these reports only if there is significant deviation from the plan.

Program Financial Management
The financial feature of a program comprises the need to conform to internal (and sometimes
external) policies and/or regulations for significant expenditures. It also includes development
and use of program-specific procedures for making and reporting expenditures.
Overall costs for programs are usually considerably greater than those for projects. For example,
projects that consume one to five man-years of attempt might have an internal cost range of
$250,000 to $1,000,000, assuming the resources are employees (not contractors) with an hourly
charge-back rate of $100 to $150 per hour. A program to upgrade and rewrite the core software
applications of a large financial services company might require between 750,000 and 1,000,000
work hours, a staff of 175 consultants and 225 employees, and expenses ranging between
$160,000,000 and $200,000,000.
The costs are bigger not only because the program is larger, but also as it entails more types of
expenditures. In a project of the size we just explained, most — if not all — the expenditures are
for labor, from an accountancy viewpoint. The program costs would include labor (both internal
chargeback and consulting fees, and travel and living expenses, including short-term apartment
leases), hardware, packaged software applications (which may be capitalized and depreciated),
work space (perhaps construction, too), and furnishings/equipment, such as computers, servers,
printers, desks, chairs, cubicles, and so on. Enterprises have different ways to treat these
expenditures, outlined in financial policies and procedures. Government agencies and regulated
industries may also have laws or regulations regarding spending and expense reporting.
From an administrative point of view, the responsibilities associated with authorizing, recording,
and reporting program expenditures go well beyond those typically exercised by an individual
project manager. Typically, the office of the Chief Financial Officer (CFO) will be involved
during the strategic definition and financial justification phases of a program. Financial analysts
will construct and/or use complex financial models, see that the enterprise’s financial policies
are interpreted and applied correctly, and ensure that the program’s financial impact is accurately
represented to executives at key decision points.
The CFO’s engagement will continue, with different responsibilities, throughout the program’s
lifecycle. The program office will typically include a role for a budget administrator who assists
the program manager/director in ensuring conformance to financial policies and guidelines. A
best practice requires the CFO to fill this role with a full-time or part-time financial analyst.
Early in the program, you should plan and conduct a checkpoint review of the financial
management apparatus and identify needs and requirements that are specific to the program.
Implementing the program’s financial practices may require nothing more than educating people
about how to apply them. However, in some instances you may need to tailor and adopt
policies, create new cost centers and/or a chart of accounts, and outline financial procedures and
assign decision authority unique to the specific program.

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