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Adding Internal Rate of Return (IRR) Columns

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You are viewing content for Planview Portfolios HIDDEN 2023 UI.
You are viewing content for Planview Portfolios.
You are viewing content for Planview Enterprise One™ release – Portfolio and Resource Management.

Why Add Internal Rate of Return (IRR) Columns?

Add IRR columns to support users displaying information that indicates the discount rate needed to make a project's Net Present Value (NPV) equal to 0.

Adding IRR Columns

To add a financial-planning column that displays IRR values:

  2. Click New > IRR Column.

  3. Type a column name and description. The description is displayed as hover text when the attribute is displayed as a column on a screen.

               

    TIP

    You can skip making a selection from the Show Value list because its default is Percentage, and IRR values are always expressed as a percentage in the column.

               

  4. Click the Optimize list, and then designate whether a value displayed in the column is considered to be a cost that decreases revenue or a benefit that increases revenue by clicking Minimize or Maximize (respectively).

  5. Designate whether the attribute's calculations in investment and capacity planning respect capacity as defined in the Planning portfolio a user selects on the Investment and Capacity Planning screen. To do so, select or clear the In Investment and Capacity Planning, do not respect portfolio capacity check box.
  7. In the Primary Structure section, designate the financial-planning models to which the column is to apply. To do so, select or clear check boxes as appropriate.

  8. In the Criteria section, select a Cost column and a Benefit column.

    You can select any subtotal or calculated financial-planning column formatted to display as Currency. The system uses your selections to calculate the IRR discount rate as Cost = Benefit (in other words, where NPV of the investment is 0).

  2. Click Add IRR Column.

  3. Type a column name and description. The description is displayed as hover text when the attribute is displayed as a column on a screen.

               

    TIP

    You can skip making a selection from the Show Value list because its default is Percentage, and IRR values are always expressed as a percentage in the column.

               

  4. Click the Optimize list, and then designate whether a value displayed in the column is considered to be a cost that decreases revenue or a benefit that increases revenue by clicking Minimize or Maximize (respectively).

  5. Designate whether the attribute's calculations in investment and capacity planning respect capacity as defined in the Planning portfolio ​​​​​​a user selects on the Investment and Capacity Planning screen. To do so, select or clear the In Investment and Capacity Planning, do not respect portfolio capacity check box.

  6. In the Primary Structure section, designate the financial-planning models to which the column is to apply. To do so, select or clear check boxes as appropriate.

  7. In the Criteria section, select a Cost column and a Benefit column.

    You can select any subtotal or calculated financial-planning column formatted to display as Currency. The system uses your selections to calculate the IRR discount rate as Cost = Benefit (in other words, where NPV of the investment is 0).

           

TIP

After adding columns, you can edit them and delete unused ones. To edit or delete a column, click the action menu button next to that column, and then click Edit Attribute or Delete Attribute (respectively). The information you can change while editing a column depends on its original configuration.

           

           

Dig Deeper

When adding IRR columns, keep the following business rules in mind:

  • On the Investment and Capacity Planning screen, IRR values display as read-only.

  • The IRR calculation employs an iterative approach in that it attempts to find an answer within 20 attempts. (This method is similar to how Microsoft Excel calculates IRR). An initial default of 0.10 (that is, 10%) is used as the initial guess and fed into the Newton-Raphson method, which is built into the system. When it is possible for multiple solutions, the answer closest to zero (absolute) is returned. Invalid Result is displayed as the relevant entity's IRR value if any of the following occurs:

    • No answer is achieved within sufficient accuracy within the 20 attempts.

    • The calculation result is extremely negative (-100%).

    • The cash flow has less than two time periods.

  • IRR is often not used as a guiding metric because of its subjectivity using an iterative approach.

  • IRR columns are supported only within investment and capacity planning; they are not supported in financial planning.

  • When adding calculated financial-planning columns, you cannot select an IRR column to add it as a component of another column's calculation.

  • Column sets help control the screens on which a particular IRR column is displayed. Attribute display settings let you disable a column from being available for column sets.

           

Prerequisites (Why can't I add an IRR column?)

If you can't add an IRR column, ensure that the following prerequisites are met.

User Role Features

The following feature must be enabled on your user role.

Enabled Global or System Options

Grants

  • None

Additional Prerequisites

  • None