Key Project Management Concepts for Accountants: As the Work Environment Increasingly Becomes Project Based, Knowing and Understanding Core Project Management Concepts Is Essential for Today's Accountants

By Liberatore, Matthew J.; Stout, David E. et al. | Management Accounting Quarterly, Winter 2007 | Go to article overview

Key Project Management Concepts for Accountants: As the Work Environment Increasingly Becomes Project Based, Knowing and Understanding Core Project Management Concepts Is Essential for Today's Accountants


Liberatore, Matthew J., Stout, David E., Robbins, Jack "Jay", JR., Management Accounting Quarterly


The current practice environment of accounting, including management accounting, is characterized by project-based work conducted in a team environment. In recognition of the strategic and operational importance of project management (PM) to business and accounting practice, PricewaterhouseCoopers (PwC) instituted a quarterly newsletter (The Project Advisor: A Quarterly News Bulletin from PricewaterhouseCoopers' Project Advisory Services) in 2003. The inaugural issue notes:

"In the tight-fisted business environment of 2003 and with increased expectations for transparency and accountability, sound project management fundamentals are more important than ever. Effectively, efficiently, and successfully executing projects is critical to ensure that resources are appropriately deployed to support the organization in its strategic and operational goals." (1)

The importance of PM to current accounting practice can also be seen in the American Institute of Certified Public Accountants' (AICPA) Core Competency Framework for Entry into the Profession, where project management is included as one of seven "personal competencies" needed for success. Within the PM area, the AICPA includes 10 specific educational elements (e.g., "ability to determine project goals," "ability to realistically estimate time and resource requirements"). As important as project management is to the successful practice of accounting today, our belief is that the PM elements (specifics) contained in the AICPA Framework--and, by extension, the core concepts of project management--are little-known to many accountants. This is not surprising: Most accountants today, including recent entrants to the profession, have not been exposed substantively to PM theory or practice in their formal studies. In short, there seems to be a significant gap between one of the educational "demands" of the current practice environment of accounting and the educational training received by those entering the profession.

This article provides a resource for accountants by discussing fundamental concepts of PM. We begin by explaining basic PM terminology and the rise of project-related work in business and accounting. This is followed by an overview of a life-cycle approach to project management. We then discuss how the PM competencies specified by the AICPA relate to each of five processes that can be used to manage projects over their life cycle. The "practice" element of project management is covered through the inclusion of a number of accounting-based examples based on recent consulting experiences of one of the authors. (2)

PROJECT MANAGEMENT TERMINOLOGY

Projects and operations are ways that organizations can perform work. (3) Operations are ongoing and repetitive, and projects are temporary and unique. Within a financial services firm, for example, the ongoing effort to enroll new customers and set up their accounts is an operation; work required to develop and implement a new business process for enrolling customers, however, is a project. This latter effort requires a series of separate jobs, or activities, performed by a variety of individuals from areas such as customer service, operations, and IT. Some of these activities must be performed in a specified sequence, such as developing a prototype process prior to running a test. Other activities may be performed in parallel, such as documenting work procedures and completing a final testing. This effort is unique to some extent because the final work process will probably differ from others in the firm and in the industry. Careful attention to scheduling, resource allocation, and coordination of the various activities is necessary to achieve the objectives of a typical project: completion of all project activities on time and within budget for a satisfied client. The term "client" is meant to be generic in nature and can refer to an individual, unit, or entity--internal or external to the organization. …

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