Purpose of Financial Planing

One of the main elements of success for managing projects is a successful financial plan. Projects depend on many variables for success; however, the financial aspect of the project concludes whether the project will go on or not. If project managers fail in creating a successful financial forecast, the project team could run out of funds and the project would hit a brick wall or will be put on hold until approval for new funding is received. Putting a project on hold also costs time and money!
A financial plan is a detailed document of the total cost estimate of the project plan. The Financial plan includes detailed description of why and how everything will be estimated. It includes pricing such as labour, material, rentals and so much more. Annual updates would allow the project leader and team monitor their current cost in accordance to the budgeted cost up to date. If there were a variance, the financial statement would forecast how much more funding is required to complete the project.