Learning Objectives

• Understand the limited financial managerial project decisions solely based on earned value management.
• Have an informed conversation about balance sheets, income statements and cash flow statements with the financial department of his or her corporation.
• Recognize when, where and how each project impacts the three main corporate financial statements.

Too often a project “lives” in an independent financial bubble, disconnected from the three main corporate financial statements: the balance sheet, the income statement and the cash flow statement. Although each project makes an impact on these three main corporate financial statements, it is often not understood where, when and how that impact is made. This white paper and presentation are geared to lessen the wide gap of financial misunderstanding that currently exists between the project management offices and the corporate financial departments.

Every project can be seen as a corporate financial investment that will generate a certain monetary return, a return which can be either positive or negative. Project managers managing these monetary investments are currently using the earned value tool to monitor their projects. Earned value allows them to see if they are staying within the approved project budget (CPI) and/or within the approved project timeframe (SPI). They can also measure project-specific Cash Flows (EAC, ETC, VAC).

How and where the projects' monetary returns either benefit or harm the three main corporate financial statements often remains a mystery to the project manager, although it is usually generally known that the project monetary returns impact the corporate bottom line...somewhere.

This white paper and presentation will not only provide insight into what balance sheets, income statements and cash flow statements are, it will also provide clarity as to where and how the projects' monetary returns can and often do tie in with these three main corporate financial statements. An increased understanding of these connections often leads to different managerial and financial project decisions than those decisions based on earned value management alone.