Sitting on my bookshelf, in all of its third edition worthlessness, is my PMBOK.  For all of you non-PMI types, PMBOK is the acronym for the Project Management Body of Knowledge, a rather ambitious title conjured up by PMI.  The actual title is "A Guide to the Project Management Body of Knowledge," which is a little less ambitious but still conjures up images of a leather bound travel guide to the West Indies.

I use the term "worthlessness" because in the past year a fourth edition of the PMBOK was published.  Assuming that I knew everything in the third edition, which I didn't despite my handsome PMP certificate, I realize that I am now deficient, lacking the additional knowledge the fourth edition has yet to pass on to me.

The PMBOK is really a Powerpoint presentation expanded into text.  Here's a snippet:

See?  It's really a bullet list cleverly disguised as a sentence. Since my copy of the PMBOK is out of date, I am now faced with my own PERSONAL ultimate disposition of project information, namely my third edition.

If you're still reading this, you're probably wondering about the dog mentioned in the title.  I have this idea to shred the third edition and feed it to my dog by hiding the little shredded confetti pieces in his dog food.  Why would I do this?  I could tell people that my dog has ingested and processed more project management information than they will in a lifetime. I could say he passed the entire contents of the PMP exam.  I could say (on his canine resume) that he was responsible for the "ultimate disposition of project information." 

All of which would be absolutely correct, of course.

Finally, since I would replace the third edition with the fourth edition and read said guide, I could know, with no small amount of smug satisfaction, that I was a little more up to date on the PMBOK than my dog.

In most accounting systems, you have what is called a chart of accounts.  A chart of accounts is a list of accounts, which are really categories; some for income, some for expenses, some for assets, etc.  When someone spends $150 on an ink cartridge for a laser printer, it might be charged to an expense category called "Office Consumables."  In a double entry accounting system, it needs to come from an account as well.  In our example, let's say it comes from a checking account, which would be an asset account, since it holds real money (one of my favorite assets).

Pretty simple so far.

Let's extend the example a little bit more.  Suppose that four months ago, a project began to develop a new product for your company.  You're the project manager, and you've been given a budget for the project.  Part of your job is to control expenses so that you can see the project to completion within the allotted budget.  Remember that ink cartridge?  It was purchased for the laser printer used by the engineers to print schematic drawings for the new product.  Suppose that in your organization, that expense will be charged to your project.

When you create reports that show the income and expenses that are directly related to your project, you're practicing project accounting.  Costs and revenue associated with your project are typically matched up to elements of your work breakdown structure (WBS), so you can have a clearer picture about where the money is flowing.  This in turn makes you more effective at managing costs associated with your project.

Does your organization track costs by project?  If so, do the software tools (your accounting software, your project management software) in place make this an easy thing to do?  We'd love to hear from you on this topic.  Write to us at blog (at) steelray.com . . .

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I recently learned an important lesson about trend lines.  Consider an expense graph that looks like this:

The values fluctuate up and down month to month.  To smooth out the chart, average expenses over the preceding 12 months (a trailing 12 month average chart).  By doing that, you might see something like this:

The rolling average shows a much more consistent picture.

There is a big flaw in this method, though.  Let's add a permanent fixed expense starting in the first June.  When plotting this to a trailing 12 month average chart, you would see something like this:

From the chart, it looks like you have a bad trend developing.  It's not obvious from the trend line that you had a large, permanent increase.

The main lesson learned here is to look at your data in multiple ways.  Look at different date ranges.  For example, a trailing 3 month average would have shown a clearer picture in this case.