Work In Progress Financial Management

Work in Progress (WIP) is billable time and expenses that have NOT YET been billed on a client invoice and/or recognized/accrued in the financial books and records. It is work that is already completed, or expenses already incurred, but it is in the progress of being billed and/or recognized.

In one of the world’s top 5 stock exchanges, the budget of its US$25 million project had been overrun for more than 3 months before its project managers, management committee and steering committee knew about it. This can happen if your project management tool doesn’t support WIP accounting.

Production is a continuous process. So, any work that has been started but is not yet completed before the end of the accounting period is reported as work in progress (WIP) under Generally Accepted Accounting Principles (GAAP).

By understanding the disadvantages of not having resource adequacy management, it is easy to see its significance. Without the right data, managers have little control over their projects and tasks.

The following is the list of common challenges in project resource adequacy management that most project organizations are facing:

1. Deadlines, planning and resource skills

Challenge:

Resource adequacy management involves finding and effectively managing available resources to deliver projects within the time constraints. If you don’t know how to measure the resource capacity of your organization’s projects and tasks, your organizational efficiency may suffer—you may have too many resources assigned to some projects or tasks, while other resources may be overworked, with most projects and tasks under-resourced, leading to quality issues in projects and tasks, or even lost sponsors and supporters.

2. Plan for ongoing resource needs

Challenge: Running an project organization that services other organizations means balancing your resource time between working on current projects and planning future work.

Other organizations’ projects may abruptly end, expand or start for various reasons. In a post-COVID-19 world, these ups and downs appear to be more dramatic than before. If you don’t have a dynamic tool that can re-compute your resource capacity in real time when a project’s downtime or increased demand happens, some projects may be affected.

Demand problems stem from inconsistencies from the project managers or resource managers who are responsible for allocating resources to the projects. This could be due to being overly conservative in the project planning stage but weak in monitoring and slow in re-planning during project execution.

Project managers are often caught by this problem because they couldn’t trust their managers but on the other hand they shouldn’t blindly trust their managers if they don't even have a way to get the up-to-the-minute right data to manage.

3. Ability to quickly and precisely reallocate resources

Challenge:

Sometimes, no matter how much planning and preparation managers do in advance, problems can arise. Project roadblocks may occur at any point in the project life cycle, from stakeholders changing their minds to realizing that you don’t have enough resources to complete the project, so managers need the ability to quickly and precisely reallocate resources.

Without the right tool for managers to timely know the occurrence of resource conflicts, and to quickly search and reallocate resources with appropriate skills in the resource database, which is automatically updated in real time and provides accurate resource data to make search and redeployment easier, it is very hard to do it right.

The designer of  understands that project resource management isn’t a single project issue but a multi-project issue.  was designed with a global resource database that caters to real-time changes and re-computation.

Since not all professionals are willing to enter a lot of information,  was designed to be able to function with minimal human input, even just the following:

• Project name
• Project start and end dates
• List of resource names

After the project organization has a simple start, it can use more features so that its resource adequacy management will have more sophistication.

resource adequacy management can work with any project management methodology such as Agile and Waterfall.