project finance management software

project finance management software

Optimizing Project Finance Management through Software Solutions

1. Introduction to Project Finance Management

Today, project finance management is undergoing a series of changes after a period of neglect for several years. The changes are caused by the demands for maintaining cost control, accountability, and productivity in the face of the trend of decentralizing organizations, together with the rapid development of computer hardware and software available to improve the management of the project. It is essential that the knowledge gained in implementing several sophisticated and successful project management techniques should be used in the future. To achieve a successful project, the basic requirements are that cost and schedule must be met, and the product shall meet the required performance, safety, and environmental considerations. It is achieved by employing the most appropriate project management and preparation.

Project finance management is a process of structuring, controlling, and managing various project aspects. The responsibility of project finance management is to keep everyone involved in the same direction by coordinating the planning, execution, accounting, and finance. By doing so, the project will have a clear set of goals and objectives and avoid the development of scope creep as the project evolves. This document shall set the requirements and expectations of project finance management for all projects, large and small. To ensure project finance management requirements are applied according to a defined standard. Project finance management is the most important aspect of a project: it embraces the organization of the entire operation. The concept of project finance management applies to any size and type of project.

2. Challenges in Project Finance Management

Reviewing successful, and not so successful, projects in its portfolio, a project finance institution called Finame identified common pitfalls for a project to succeed. Those pitfalls were described by Alves (2015), pointing to a lack of assumptions documentation, inconsistent risk identification and quantification, no clear differences among proposals and decisions for internal projects, no real business case highlighting benefits desired versus costs, no business case linked to the business strategy, and no regular monitoring of the execution. It is not a coincidence that all these issues are regarded as common problems in project finance management, as they have been studied and documented in the literature for many years, and Thayer et al. (1997) proposed a standard methodology for project financing that prioritizes the use of information systems since 1989. According to the literature review in Rousseau, Lesage, and Schiffauerova (2016), companies that have good control of their internal project financing systems will tend to have a lower probability of failure on their projects.

1.2.1. Common challenges in project finance management

This section will discuss typical challenges in project finance management and how they can be addressed through information systems. It will be conducted through literature review and the analysis and discussion of some real-world examples.

3. Benefits of Utilizing Software Solutions

Optimizing Efficiency for Inputting and Processing Transactions The first benefit of software is the substantial improvement in the computational and manual workload in inputting and processing transactions, especially for a substantial amount of day-to-day transactions. Using software to post transactions can optimize accuracy and speed of transaction processing, auto-generate common business documents to send to stakeholders, and limit redundancy and human errors in manually filling standard transaction details like numerical coding structures, numbering, billing dates, and warranties. Particularly as project finance is often characterized by large volumes of transactions at either end or during the construction and management phases of a project (insurance claims, compliance requirements under contracts, etc.), manual transaction inputting can be very time-consuming and labor-intensive.

Software applications and programs are technological tools that aim to improve efficiency, accuracy, and speed up work processes beyond what human efforts can achieve. Software applications are highly advantageous in a financial and accounting context due to the need for accurate computations and comprehensive and diverse reports. Specific benefits of utilizing software solutions to optimize project finance management include improved efficiency of inputting and processing a high volume of transactions, advanced and accurate reporting to users with diverse information demands, integration of various financial functions, as well as providing various options to visualize and interpret financial information aiding decision making. Overall, the use of software can enhance the quality of financial management in large projects and facilitate timely decision making.

4. Key Features and Functionality of Project Finance Management Software

To begin with, project finance management software focuses on stages related to investment management. These stages start from the decision making in evaluating the right projects to invest into, laying a business case, setting the strategic vision of the project, going through the financial instructions and defining the best vendors to team up for a successful contract. The project finance software highlights each stage of the workflow offering users with an overview, dashboard and menu to manage the various activities throughout this phase. The software helps the project financial team in proving the business case, negotiating the vendor contracts and setting up the financial conditions. The software aggregates project terms and conditions relative to all vendors required in the operation of the assets and syncs this data with the project accounting system. Moreover, the software grants notification and report system to ensure the correct activities linked with invoice, banks, financial statements and statistics are always supported and signed off by the correct authorized person in the organizations. Overall, this project finance management feature contributes to effective governance of the investment cycle ensuring full visibility of all the required tasks and areas of control between project financial partners.

Project finance management software provides professionals with various automations of the project life cycle – from the supply, document management and bidding, until the financial management over the operation and maintenance phases. Efficient project finance management solutions offer different features and functionalities that optimize the work process, enhance the performance, provide clarity and transparency, and reinforce communication between the project team. Hence, we stress out the key features and functionality of project management software that you could directly contribute to the optimized management of your project.

5. Case Studies and Success Stories

Implementing project software in the energy sector involves various risks. For the high production costs of these advanced tools, this type of software may pay back depending on the size of the company. Without success in implementation, the major high costs involve indirect expenses. Many sectors use generic software that supports the management of the company. This common system helps to manage financial reports, budget forecasts, new projects, and other administrative transactions. The largest units operate an existing and independent project control system to monitor all activities of the investment project. These systems make an effective and rational decision of the indirect costs of the project. The purpose of these control systems is to restrict the project to the date of completion by quality, timetable, and budget. The management of the industry inflicts the schedule of expansion, life-cycle, and predicted return when needed on the project team.