Financial Planning
Financial Planning
The Financial Planning capability supports the planning and management of product, program, and project financial information and the monitoring of financial performance. Each capability within the Planview Capability Framework has a distinct set of features and functionality, business processes, best practices, and analytics and reports that deliver value to customers in the form of specific business outcomes.
Definition and Business Outcomes
Definition
- Supports the planning and management of product, program, and project financial information along with the monitoring of financial performance.
- Includes the mechanism to set time-phased high-level estimates and approved or baseline budgets that planned and current investments can be analyzed against.
- Allows for snapshots and comparison of different sets of financial data taken at key approval and governance points, providing a standard for measuring performance.
Business Outcome
We can manage product, program, and project financial data in a structure that aligns with our organizational financial data model.
Business Outcome
We can define budgets at various levels, such as product, strategy, program, project, or value stream, that represent the investment “pot.”
Business Outcome
We can support investment planning by providing the context of budgets for analyzing demand and making assessments on our ability to take on new investments.
Business Outcome
We can adjust budgets as needed to reflect changes in priorities and desired outcomes.
Business Outcome
We can adopt an iterative approach to budgeting, adjusting funding based on changing business priorities and outcome-driven indicators.
Business Outcome
We can forecast the costs and effort required to deliver, as well as the anticipated benefits or revenue. This information can be used to calculate investment KPIs and inform a business case.
Business Outcome
We can monitor financial performance against an approved baseline, easily identifying over- or underspend and take appropriate remedial actions.
Business Outcome
We can track financial plans over time and automatically calculate metrics such as IRR, NPV, ROI, and payback period.
Best Practices
Build a single source of truth
Organizations should strive to standardize their financial processes so that the platform becomes the single source of truth for financial tracking. When everyone is using the same processes and categories, you’ll be able to make accurate decisions and understand the financial status of each project and the entire portfolio.
Fund programs strategically
Prioritize and fund program investments based on quantifiable business benefits, such as ROI, NPV, and customer retention metrics.
Give each value stream a budget
In agile organizations, define spending policies, guidelines, and practices for each value stream within the portfolio. With these guardrails in place, each value stream should have autonomy, flexibility, and the speed to execute their own budget.
Monitor financial health
Having the right reporting and dashboards that display the financial health of both individual projects and the overall portfolio are necessary to ensure the right decisions are made when a project starts to deviate from the plan.
Baseline financial plans
When there is an approved change to a project’s financial plan, save off the new plan as the current baseline. Having each change to the plan saved as a separate baseline allows you to see the progress of financial changes, and when looking back, see adjustments during a project’s initial planning to allow for more accurate budgeting.
Understand top-down and bottom-up
Organizations can use top-down planning (where a pool of funding at the program or strategic level is used to fund the work aligned against it), or bottom-up (where the work is funded and then rolled up to appropriate levels to see the overall costs or benefits.) Understanding how your organization tracks and approves funding is important to know what guardrails are in place and what reporting will be used to track financial performance.
Processes and Reports
The financial planning capability supports the forecasting of costs and revenue to build a financial plan and baseline a budget. These budgets support strategic investment planning by providing the context of budgets to analyze against demand, enabling you to assess your organization’s ability to take on new investments. When implemented with the cost management capability, financial planning also provides detailed planned vs. actual variance reporting.
Financial Planning Process Steps
Financial planning process flow
| Process Step | Description |
|---|---|
| Forecast resource effort/costs |
Estimate the high-level resource costs. Managers can plan resource costs by entering role-level demand directly into the financial plan in either FTEs or days. This demand is associated with certain resource details such as organizational role and location. The application then determines the costs of the resources based on their attribute categorization and estimated effort. For the purpose of balancing capacity with demand during investment and capacity planning, an administrator can load the capacity of a cost center-based financial plan for either a portfolio of cost centers or all cost centers. Administrators can load this capacity immediately or can schedule the load. |
| Forecast non-resource costs |
Estimate the high-level non-resource costs. Managers can use the Financial Planning Detail Screen to enter this data manually, or use expenditures. |
| Forecast benefits and/or revenue | Estimate the financial benefit of delivering the work. |
| Develop business case |
Ensure the business case attributes are correct and current, which can help drive a business case analytic output. The business case can include forecast financial data, planned schedule and milestone dates, and the core attributes derived from the organizational data model. For projects, project managers can use the WRK13 – Project (and Portfolio) Business Case report to see a summary of key business case information on a single project or across a portfolio. |
| Baseline budget |
Build a budget by creating an initial estimate of costs. Managers can take a baseline of the financial plan to capture a snapshot of the original budget. They can then compare this baseline with future baselines to monitor progress. Financial baselines are created by copying the current forecast version in to a baseline version. This can be done manually or as part of a lifecycle step. For more information: |
Financial Planning Process Steps
Financial planning process flow
| Process Step | Description |
|---|---|
| Enter initial estimated cost and revenue |
In the Finance section of the project enter the initial Budgets Cost and Expected Revenue. If timesheets are not being used, the Actual Cost and Actual Revenue can be manually entered or calculated from manual entries on the schedule.
Enter estimated cost and revenue on the project For more information: |
| Enter planned hours for resources on tasks on the project schedule | Project managers plan resource costs by creating their detailed schedule (work breakdown structure) and assigning the needed resources to tasks and assigning planned hours. The financial plan Labor Budget and Forecast are the calculated using those tasks, resources, assigned hours and the respected resource rate. |
| Enter budget for non-labor resource costs on financial planning |
Enter the budget for the non-labor resource costs required to deliver the work into the financial planning.
Enter non-labor resource costs For more information: |
| Enter budget for forecasted revenue on financial planning | Enter the budget for the financial benefit of delivering the work into the financial planning. |
| Budget approved/forecast entered | The final project budget is reviewed and approved. Once approved, the Budget totals are entered into the Forecast. This allows tracking of Budget versus Forecast to track the progress of the project or program. |
Related Capabilities
Work Management
This capability provides managers the ability to develop a work plan, view and manage all work details, define and classify risks, issues, and change requests, track and manage project delivery, and provide reports on the overall status and health of projects.
Read moreCapacity Planning
This capability provides the mechanism to set resource capacity targets which can be used to analyze capacity against demand, and assess the organization's ability to continue with existing investments or adopt new investments.
Read morePrioritization and Scenario Analysis
This capability provides the ability to compare, assess, prioritize, and rank all your potential and existing investments before the approval of your overall portfolio plan. The creation and comparison of what-if scenarios is supported to inform investment decision-making.
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Supported Solutions
Project Portfolio Management
With a line of sight from strategy to delivery, Planview enables leaders to optimize program and project portfolios, balance capacity against demand, prioritize work, focus resources, and empower teams to deliver.
Read moreProduct Portfolio Management
Planview’s Product Portfolio Management solution provides scalable enterprise-level software that enables the management, prioritization, and continuous innovation of products in development.
Read moreStrategic Portfolio Management
With dynamic planning and execution, Planview’s Strategic Portfolio Management solution enables leaders to invest incrementally, quickly shift resources, and use cross-functional teams to align organizational goals to an ideal team work structure.
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