Sarmistha:
It would be almost impossible to describe every scenario that could occur in relation to the calculation of NPV/IRR with the rollup of child investments into a parent.
What you might include is a note to users similar to: “The NPV/IRR/MIRR values that are calculated at the Parent level are based on the totality of the costs and benefits over time of the values rolled into the Parent level investment. That dynamic includes the timing of when those costs and benefits occur, as well as their relative size. In cases where the child investment timing extends beyond the Self level of the parent investment, the calculation takes into account the extended time-frame.”
Your system calculations correctly account for the above dynamic, but persons who are not familiar with financial concepts can be confused at the results without more explanation – which should be kept simple and direct, as I hope the above would be. I am sure that your writers can improve on my suggestion as well.
The only other related item, which is slightly more arcane, is that you may want to include a line in the documentation that the NPV/IRR/MIRR as calculated on OOB values in CA PPM are EBITDA based; Earnings Before Interest, Taxes, Depreciation and Amortization. Where those values are needed to accurately forecast an Investments profitability, they should be added as appropriate to the cost and benefit plans.
Incidentally – I do want to mention that overall, the quality of the CA PPM system documentation has improved markedly over the past couple of years. The changes in content and presentation have been really good. For perspective, I have been working with CA PPM for 17 years, so I have seen the good, the bad and ugly here…and the current trend is way on the good side.
Regards,
John Fechenbach