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2017

Hi PPM practitioners! Welcome back to the last blog in this Financial Planning series (for now, but who am I kidding); hope they have been helpful.

Why Track Investment Spend?

Key business drivers for tracking actual cost against investments are generally in the family of cost control. Every wise PM wants to ensure that delivered outcomes provide value to the organization. Part of delivering that value includes ensuring that the cost of actual work performed is in line with authorized spend (cost and budget plans). Insight into whether actual cost constitutes variance to plan is a critical early warning/risk indicator for leadership and project teams, and is especially important while there’s still time to make course corrections.

Financial Review Report

 

Regardless of delivery mindset (agile, waterfall, hybrid), the consequences of unmanaged cost overruns can force undesirable scope reductions (leading to outcomes that fail to delight the organization) and/or slower time to market (resulting in lower profitability). Early insight into poorly performing investments also enables executives to make better decisions about when to reinvest in a more optimal portfolio.

Portfolio Review

 

Actual Cost Entry Methods

CA PPM supports several methods for capturing actual cost:

  • Timesheets: Actual cost of labor resources automatically derived from posted CA PPM timesheets based on the cost/rate matrix.
  • Transaction Entry: Manually entered transactions for non-timesheet labor and other non-labor expenses by investment/ resource/transaction date/quantity based on the cost/rate matrix or supplied rate.
  • Imported Transactions: Labor and/or non-labor transactions imported from an external source (e.g., Oracle, SAP) leveraging the CA PPM Financial Transactions Adaptor Packaged Work Product (PWP). Check out more info on CA PPM PWPs and this blog by CA architect Janet Ulrich.

 

Dashboards and Reports

CA PPM provides value-added dashboards and reports to track transaction-, investment- and portfolio-level costs based on the needs of PMs, Finance, and other leadership (beauty of CA PPM's end-to-end ideation to deployment integration).

Investment Actual Cost

Investment Cost by Period

 

There's much more, but hopefully you have seen the simplicity of getting started with CA PPM Financial Planning. Go for it.

 

In Case You Missed It

Taking the Mystery out of Financial Planning – Part 1 (The Basics)

Taking the Mystery out of Financial Planning – Part 2 (Financial Framework)

Taking the Mystery out of Financial Planning – Part 3 (Classifications)

Taking the Mystery out of Financial Planning – Part 4 (Managing Rates)

Taking the Mystery out of Financial Planning – Part 5 (Cost and Budget Plans)

 

Readers interested in more detail around CA PPM Financial Planning can check out DocOps. I encourage you to participate in the best-in-class CA Communities site, where you have access to your peers, events and support. You can also reach out to CA Services for information about CA PPM and individualized business outcome references and analysis. Feel free to post in the comments section of this blog or contact me directly via email and Twitter @kdobsonppm.

Hi PPM practitioners! Welcome to my 5th blog in the series. I hope these are helpful to CA PPM Financial Planning newbies.

Which Investment Types Support Detailed Forecasting?

The good news—all of them (Ideas included 14.3+). The better news—once you know how to create CA PPM cost and budget plans, you can do it for any type of investment. The level of planning detail usually varies based on the type of investment (ideas, projects, applications, etc.), but the steps are the same.

 

Project Financial Forecast

Let’s use project forecasting as our example, since most PPM practitioners have produced a project forecast or budget in Excel. The goal is generally to provide a projection of project cost broken down by expense categories over time.

Excel Forecast ExampleCA PPM cost plans are used to prepare a high-level estimate of investment cost during the intake/initiation phase (leveraging ideas or projects) or a more detailed projection during the planning phase (preparation of business case). They are then used for obtaining funding approval. Once the investment has entered the execution phase, cost plans provide an ongoing forecast of spend and track actuals and variances to approved spend.

 

Cost Plan Structure

The cost plan structure consists of a definition of general properties, along with line item details grouped by investment cost categories, with estimates for each planning period.

Cost Plan Properties

Cost plan properties define the planning period and attributes used to group costs into specific expense categories.

Cost Plan Properties

To ensure reporting and tracking consistency, establish a standard for grouping attributes used to plan investments. Planners can create other cost plans for the investment, grouped by different levels of detail for analysis, but the plan of record for each investment should be standardized as defined by the organization’s business process.

Cost Plan Details

Cost plan details contain line item detail by planning period. In the example below, the forecast is defined by cost type (for breaking out capital vs. operating costs) and transaction class (categories of expense).

Cost Plan Details

 

Populating the Cost Plan

This is one of my favorite features; it demonstrates the power of CA PPM component integration.

Labor Forecast

During initiation or project planning, the project manager identifies staffing requirements by estimating resource roles and level of effort the investment requires. During planning, the PM works with resource manager(s) to target and commit resources.

Two powerful cost plan features are Populate from Investment Team and Populate from Task Assignments. Leveraging the PM’s staffing work, the cost plan can automatically forecast labor cost by using one of the population methods and the cost/rate matrix. The Populate from Investment Team action uses team allocations to forecast cost by category and time period. Populate from Task Assignments uses assignment estimates defined in the project’s work breakdown structure (WBS) to project cost by category and time period. The cost plan can be repopulated to reflect staffing and work revisions. Note: The Populate from Task Assignment action is not available on ideas, applications, assets, products, services and other work investment types, as these do not have a WBS. Populate from Investment Team is available on all investment types.

Other Cost

For other cost (e.g., purchase of equipment or travel), estimates can be manually entered. Repopulating the cost plan doesn’t impact manually entered estimates for non-labor. Care should be taken, however, not to manually update estimates on line items coming directly from the Team or WBS estimates. (One method or the other should be used consistently.)

 

Cost Plan of Record

Since CA PPM supports multiple cost plans, only one may be designated as the plan of record (POR) for communicating planned cost in all CA PPM reports and dashboards.

 

Using Cost Plans for Approved Spending (Budget Plan)

The cost plan is also used to request budget approval in CA PPM, reflecting approved spending for the investment. The PM flags the cost plan POR and uses the submit for approval feature to automatically generate a budget plan. A copy of the submitted cost plan is created as a budget plan and reviewed/updated by the budget approval team. If approved, the budget plan is automatically flagged as the budget plan of record (POR) and becomes view-only. Revisions may be managed by repeating the process. CA PPM retains budget history.

Budget Plan

 

Ongoing Forecast

Forecasted spend may vary during the life of the investment. CA PPM supports reforecasting spend by period without touching the approved budget plan. Revisions may be made directly to the cost plan POR, or the Copy Cost Plan feature may be used to generate a new forecast, retaining the original. Revisions exceeding current approved budget or major reductions may also leverage the Budget Plan submission noted above.

 

Coming Soon

In my last blog for the series, I’ll cover entry of actual cost.

In Case You Missed It

Taking the Mystery out of Financial Planning – Part 1 (The Basics)

Taking the Mystery out of Financial Planning – Part 2 (Financial Framework)

Taking the Mystery out of Financial Planning – Part 3 (Classifications)

Taking the Mystery out of Financial Planning – Part 4 (Managing Rates)

 

Readers interested in more detail around CA PPM Financial Planning can check out DocOps. I encourage you to participate in the best-in-class CA Communities site, where you have access to your peers, events and support. You can also reach out to CA Services for information about CA PPM and individualized business outcome references and analysis. Feel free to post in the comments section of this blog or contact me directly via email and Twitter @kdobsonppm.

Hi PPM practitioners – welcome back! My last two blogs covered the essentials of CA PPM Financial Planning setup (framework and classifications). In this post, I’ll review the cost/rate matrix and the basics of its role in financial planning.

The cost/rate matrix (referred to by many as the rate card) defines the rate at which resources should be costed in the financial plan and costed/billed in financial transactions. As noted in my blog on basics, this can be as simple as setting up a single blended rate for all resources. It can also be broken out by different rates based on factors such as the role of the resource (business analyst, developer), type of resource (employee, offshore contractor), where the resource is located, standard time vs. overtime, capex/opex, etc. Regardless of the level of granularity, most CA PPM customers use a fully loaded blended rate for employees and actual rates for contractors. (Fully loaded blended rate is accounting language for a rate that includes employee wages and the full burden of other employee costs such as taxes and benefits.)

Rates by CriteriaMatrix Types

CA PPM supports separate matrices for labor, equipment, material, and expense type resource rates, including cost and revenue differences. Unless there is a compelling reason otherwise, most organizations use a single matrix for all resource types, including cost and revenue differences (simplifies maintenance).

Rates

Three rate fields are included in a cost/rate matrix:

Rate: The billing rate used to calculate total revenue in financial plans and chargeback transactions. If revenue/chargeback isn’t used, set as 0 or make it the same as the actual cost rate.

Standard Cost Rate: Not used in CA PPM, but can be used for custom reporting (e.g. compare FY original planned rate vs. current rate).

Actual Cost Rate: The rate used in deriving the planned cost of the resource in CA PPM financial plans and the actual rate applied to financial transactions for the resource (if not provided on the transaction).

Cost/Rate Matching Criteria

The assignment columns in the matrix define the criteria used for matching the correct rate/cost in financial planning and transaction processing. Up to 10 of the following fields may be used in the matrix as matching criteria. (The most two common are in bold.)

Rate Criteria OptionsOther categories frequently used for matching include Resource Class (for breakout by labor type), Input Type Code (for designating standard time vs. overtime or billable vs. non-billable), Cost Type (for differentiating capex vs. opex rates), and Department/Location (for differentiating rates by business unit or region).

Cost/Rate Dates and Order

The first two columns in the matrix define the effective from and to dates for the rate. This enables you to set up new rates in advance without removing or revising current rates (helpful with annual planning in advance!). Note: Changing a rate does not impact financial transactions that have already been processed. CA PPM’s WIP adjustments feature makes provision for recalculating prior posted transactions if needed. Re-populating an investment’s financial plan, on the other hand, always uses the latest rates.

The order of the columns is important. CA PPM evaluates columns from left to right to qualify the correct match. For example, if Role and Investment are used (as per below), the rate for all resources with the role of developer in 2017 is $150/hr., except developers on project PR1005 (an exception project) are $0/hr. In 2018, all developers will be $155/hr. The asterisk (*) serves as a wildcard for all other conditions.

Rate Example

Non-labor type resources (hardware, travel, etc.) can be included in the matrix, but a more common practice is to manually estimate in financial plans for forecasting purposes, and include actual cost at time of financial transaction entry (since such rates are typically not standardized).

For external contractor resources, a common practice is using Resource Class and a general/blended planning rate, with actual rate entered for financial transactions.

Investment Setup

Linking the cost/rate matrix is part of financially enabling investments. If financial transactions are entered without rate and cost, CA PPM looks for the rate/cost in the investment's designated cost/rate matrix. You can default matrices at the investment level, entity level, and/or system level. CA PPM first looks for and applies matrices at the investment level, then at the entity level, and then system level. If financial transactions are entered with a rate/cost, these are used instead of rates in the matrix.

Coming Soon

In my next blog, I’ll cover CA PPM cost and budget plans.

In Case You Missed It

Taking the Mystery out of Financial Planning – Part 1 (The Basics)

Taking the Mystery out of Financial Planning – Part 2 (Financial Framework)

Taking the Mystery out of Financial Planning – Part 3 (Classifications)

Readers interested in more detail around CA PPM Financial Planning can check out DocOps. I encourage you to participate in the best-in-class CA Communities site, where you have access to your peers, events and support. You can also reach out to CA Services for information about CA PPM and individualized business outcome references and analysis. Feel free to post in the comments section of this blog or contact me directly via email and Twitter @kdobsonppm.

Hi PPM practitioners—welcome back! In my last post, I covered the essential setup of the CA PPM Financial Framework (Entity, Locations, Departments, Fiscal Periods). Here I will define the most common financial classifications needed to support CA PPM Financial Planning.

CA PPM financial classifications enable you to properly categorize resources, investments and financial transactions to meet the needs of the organization’s financial planning process. Most of these may be used to group the line item investment cost detail within cost/budget plans. The descriptions below are not meant to be exhaustive, but represent the most common uses.

Resource Classes

Resource classes are typically used to categorize the organization’s various types of labor (e.g. internal labor, external labor such on-shore contractor, off-shore contractor, etc.) for financial planning purposes. Non-labor resource classes may be defined to support categorization of expense, material, and equipment type resources. CA PPM supports definition of different rates by resource class. If financial tracking is not required at a resource category level, create a default resource class. Resource classes are assigned to resources on financial properties and defaulted on actual cost transaction entries; they may not be overwritten during actual cost transaction entry.

Plan by Resource Class

Transaction Classes

Transaction classes are commonly used to categorize the various types of cost incurred on investments (internal labor, external labor, licenses, hardware, software, travel, etc.) for financial planning and reporting purposes. CA PPM supports definition of different rates by transaction class. If planning is not required at an expense category level, create a default transaction class. Transaction classes are assigned to resources on financial properties and defaulted on actual cost transaction entries; they may not be overwritten during actual cost transaction entry.

Plan by Transaction Class

Charge Code

Charge code is one of the customer-driven fields that may be used in financial planning. In the example below, charge code is used to group cost by category of work coming from the investment’s work breakdown structure (WBS). It is also commonly used for sub-categorization of expenses, designating billable/non-billable expense, or for sub-categorization of CapEx/OpEx beyond Cost Type values of Capital and Operating. CA PPM supports definition of different rates by charge code. Charge codes are required by CA PPM for actual cost transaction entry and may be assigned to the project as a default, at the WBS task level or during cost transaction entry. They may also be entered during time entry. If not used by your financial planning process, create a default value.

Plan by Charge Code

Input Type Code

Input type code is most commonly used to indicate whether a resource is billable or not. Another common use case is delineation between standard time and overtime for a resource. Input type code is assigned to resources and defaults on time sheets and actual cost transaction entries but may be updated. CA PPM supports definition of different rates by input type code (e.g. standard time vs overtime).

Timesheet Use of Input Type Code

Investment Class

Investment class differentiates different types of work across investments as it relates to the treatment of financial processing. For example, using out-of-the-box CA PPM, “Standard” can be used on investments that generate revenue or with inter-department transfer of charges (using CA PPM Chargebacks). “Internal” indicates that the investment generates no revenue (e.g., administration/maintenance). Investment class is assigned to the investment (or company if used). CA PPM supports definition of different rates by investment class.

Company Class

When applicable, company class can be used to differentiate internal from external customers. Company class is assigned to the company (if used). CA PPM supports definition of different rates by company class.

WIP Class

WIP class is most commonly used to differentiate investments for revenue recognition as part of financial reporting. WIP class is assigned to the investment (or company if used). CA PPM supports definition of different rates by WIP class.

Coming Soon

In my next blog, I’ll cover the role of the cost/rate matrix.

In Case You Missed It

Taking the Mystery out of Financial Planning – Part 1 (The Basics)

Taking the Mystery out of Financial Planning – Part 2 (Financial Framework)

 

Readers interested in more detail around CA PPM Financial Planning can check out DocOps. I encourage you to participate in the best-in-class CA Communities site, where you have access to your peers, events and support. You can also reach out to CA Services for information about CA PPM and individualized business outcome references and analysis. Feel free to post in the comments section of this blog or contact me directly via email and Twitter @kdobsonppm.