- Produce a cash flow overview.
- Develop a financing strategy for the project/programme/portfolio.
- Identify the possible sources to acquire funds from.
- Act according to the financial decision-making processes.
- Work together with potential sponsors in order to acquire funds.
2 hours CPD
A7.KCI-3 Secure project funding
The project manager ensures that financial resources are available at the right time to cover costs and keep the project moving. While securing funds is formally the responsibility of the project sponsor, the project manager plays a crucial role in preparing accurate estimates, cash flow overviews, and funding requirements.
Funding discussions may be shaped by organizational processes and sometimes by political circumstances, requiring the project manager to actively promote the project and support sponsors in obtaining the necessary resources.
1. Establish Funding Strategies for Projects
- Prepare an overview of project cash flows, showing when money is needed.
- Use the cash flow analysis to support both investment appraisals and liquidity assessments.
- Decide on the method of financing:
- Internal funding: from the organization’s own cash flows.
- External financing: through loans, bonds, or equity (with repayment obligations, interest, or dividends).
- Recognize that the sponsor and senior management determine the financing approach, while the project manager provides the supporting financial data.
2. Identify Sources of Funds
- Internal: Company reserves or operating cash flows.
- External: Banks, investors, bonds, or government grants.
- Consider implications for:
- Liquidity (short-term ability to pay)
- Solvency (long-term ability to repay)
- Be aware that external financiers may require guarantees or collateral (e.g., mortgages, preferential creditor arrangements).
3. Handle the Organisational Approval Processes
- Follow established internal approval and financial decision-making processes.
- Submit project estimates, funding requirements, and justifications to management for review.
- Align with organizational governance, ensuring all financial requests are formally approved before commitments are made.
4. Cooperate and Negotiate with Potential Sponsors
- Maintain close contact with sponsors and stakeholders.
- Clearly communicate funding needs, timelines, and benefits.
- Support sponsors in negotiations with internal and external financiers.
- Demonstrate the project’s value to strengthen the case for funding.
To apply these actions to your current initiative, follow these steps:
- Produce a cash flow overview.
- Develop a financing strategy.
- Identify and assess potential funding sources.
- Act according to organizational approval processes.
- Collaborate and negotiate with sponsors to secure funds.
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