The Journal of Accountancy has an interesting article about Project Management for Accountants. As a Master of Accountancy student, I was intrigued on how project management can be applied to consulting or audit work when you work for a firm. This article explains that having a project management framework can allow your clients to see results instead of setting up your engagements through time sheets.
The definition provided by the journal is “a temporary endeavor undertaken to create a unique product, service, or result.” It further explains that we must understand a project to be temporary so we recognize that there is a clearly defined end. The uniqueness of every project reflects that every audit, tax return, or consulting engagement is going to be different in their goals, objectives, and constraints.
As we have learned in class, the three important variables in a project are scope, cost and time. It is called the “Triangle of Truth” or the “Triple Constraint”. They emphasize that if you change the value of one of the variables, one of the two other angles, or both, must change to compensate. Many times, the focus is on cost and time versus scope and that is when issues can arise during the project. Scope creep was also mentioned but it was interesting to note that even though it seems there is a scope creep issue, it may not always be the case. If you do not have a clearly defined scope document, there cannot be scope creep because the scope was never properly defined. This can cause a project to go over-budget. If there is scope creep, it usually happens when the CPA allows more scope to be added without adjusting the other two variables of the triangle.
More and more, different areas of business are using project management to replace their old methodologies. Accounting firms are starting to use a project management framework instead of billing by the hour or using time sheets. I think this is an effective way of focusing on the scope of the engagement while keeping an eye on budget and time. With time sheets and billing by the hour, a CPA can lose sight of the main focus of the engagement. By having a project manager on top of the engagement and making sure the project is on track, the CPA can focus on doing the relevant testing and audit. An interesting measurement of success that is discussed is called the “Percent OOB”. This is calculated by taking the number of completed issues and dividing by the number that were completed on or before the original estimated completion date. This allows the project manager to predict whether the project is on track and alerts the PM if there is an issue. With the billable hours method, a red flag usually only occurs after you have already exceeded the projected time frame. To summarize, having a project management framework allows firms to provide their clients with a more accurate timeline on when their engagement will be completed. It allows the CPA/PM to adjust and consult with the client if the three variables during the engagement are starting to affect the other two.