Financial activities involved when monitoring a project_120227.pdf

Financial activities involved in monitoring a project

1. Financial activities involved
when monitoring a project
Group4

2. INTRODUCTION
Construction financial management is allocating and accounting
for financial resources and accounting for financial to cut project
costs, maximize profits and assure long-term company financial
health(Burtonshaw-Gunn,2017)
According to (Peterson, 2013 ) There are a lot of financial activities
involved when managing a project and these activities include:
(1)Budgeting
(2)Cost management
(3)Assessment
(4)Cash Flow Management
(5)Risk Management

3. BUDGETING
•Budgeting is a critical component of construction financial
management and It serves as the financial blueprint for a construction
project,
•It plays an important role in outlining the money required for different
tasks, enabling better financial control, and reducing the risk of
overspending.
•When creating a budget, several key factors need consideration, The
factors includes : labor costs, material costs, equipment costs,
regulatory fees, and contingencies for unexpected
expenses.(Pewdum,2009)

4. CONTINUATION OF BUDGETING
•Benefits of Budgeting
It Saves time
and money
Minimisesrisks
Reduces risks
of unforeseen
costs
Helps managers
to plan ahead
BENEFITS OF
BUDGETING

5. COSTMANAGEMENT
➢It is another vital component of construction financial
management.
➢It involves strategically planning, organizing, directing, and
controlling financial activities to ensure that the project is
completed within the allocated budget, Cost management
includes cost estimation,
➢BENEFITS OF COST MANAGEMENT
(1)Keeps projects within budget parameters
(2) Results in lesser cost and the project goes as per schedule

6. ASSESSMENT OF FINANCIAL
PERFOMANCE
•Assessing the financial performance of a
construction project is crucial for effective financial
management.
•It involves analyzing the financial data of the
project to determine whether it is on track to meet
its financial goals.
•This information can be used to make informed
decisions about future financial activities.

7. CASH FLOW MANAGEMENT
•Cash flow management is the process of managing the
inflow and outflow of cash in a construction project.
•It involves ensuring that there is enough cash available to
pay for the project’s expenses when they are due.
•Cash flow helps to manage projects especially if the
client/sponsor is paying at intervals.

8. RISK MANAGEMENT
➢Risk management is the process of identifying, assessing, and
mitigating risks that could impact the financial performance of a
construction project.
➢It involves developing a risk management plan that outlines the
steps that will be taken to minimize the impact of risks on the
project. (Serpella,2014 )
➢BENEFITS OF RISK MANAGEMENT INCLUDE :
•Identifying risk exposure of an organization
•Estimating risk exposure in figures
•Aiding in risk mitigation

9. REFERENCES
Burtonshaw-Gunn, S.A., 2017.Risk and financial management in construction.
Routledge.
Peterson, S.J., 2013.Construction accounting and financial management (Vol.
2). Upper Saddle River, NJ, USA: Pearson.
Pewdum, W., Rujirayanyong, T. and Sooksatra, V., 2009. Forecasting final
budget and duration of highway construction projects.Engineering,
Construction and Architectural Management,16(6), pp.544-557.
Serpella, A.F., Ferrada, X., Howard, R. and Rubio, L., 2014. Risk management in
construction projects: a knowledge-based approach.Procedia-Social and
Behavioral Sciences,119, pp.653-662.