Requires the following solutions to be installed: Budgeting: Structure (7f7b1fec-480b-4011-9b4c-262cbc20303a) Budgeting: Automation Rules (a04a5dce-362f-499e-b168-1bf4621b53de) Budgeting: Metrics (877ad475-d0bc-4509-af72-11b5a6934895) Budgeting: Connection to Portfolio Epic (Project) (bda287bd-b86b-40cc-9a2d-4da2026bbf43) It can be extended by the following solution (if you prefer Proposed Budget to be
Requires the following solutions to be installed:
- Budgeting: Structure (7f7b1fec-480b-4011-9b4c-262cbc20303a)
- Budgeting: Automation Rules (a04a5dce-362f-499e-b168-1bf4621b53de)
- Budgeting: Metrics (877ad475-d0bc-4509-af72-11b5a6934895)
- Budgeting: Connection to Portfolio Epic (Project) (bda287bd-b86b-40cc-9a2d-4da2026bbf43)
It can be extended by the following solution (if you prefer Proposed Budget to be calculated automatically):
- Proposed Budget based on Work Allocations (b82de5e7-4b6e-48b0-aa7c-c533d423711a)
- Proposed Budget based on Headcount (22c6f9f4-9d5e-49d3-b9cc-c3bc025d245b)
It can't be used together with the following solution (as there only one vertical can be Funded):
- Budgeting: Product Funding Views (01fa67a3-faaa-477b-b057-8135cab12443)
- Budgeting: Value Stream Funding Views (0c7bed70-45bd-4d7e-a72e-4bd100e08f0e)
- Budgeting: Solution Train Funding Views (7284f89d-34f2-4016-a85c-c9c02e790d3e)
- Budgeting: Agile Release Train (ART) Funding Views (741b1f77-0471-46b1-a39f-353337e3afc4)
It shouldn't be used together with the following solution:
- Budgeting: Portfolio Epic (Project) Proposed Budget and Actuals Views (5a0acc91-50f7-4d65-be2f-154fc6cec394)
Can be used together with the following solutions (if you would like to see Proposed Budget and Actuals for Products, Value Streams, Solution Trains, ARTs or Teams):
- Budgeting: Product Proposed Budget and Actuals Views (ae4872be-1088-403f-b058-9f69c62271bd)
- Budgeting: Value Stream Proposed Budget and Actuals Views (a3c905dd-ad13-4496-ac3d-c54890fa057e)
- Budgeting: Solution Train Proposed Budget and Actuals Views (1e4bd6c1-9838-410f-9b9b-7c974bfdfec8)
- Budgeting: Agile Release Train (ART) Proposed Budget and Actuals Views (af5a5550-b908-455c-ac8b-6f9f79adcd42)
- Budgeting: Team Proposed Budget and Actuals Views (b7b13408-957b-4e7f-8464-774dc105131f)
The following diagram represent visualization of these requirements:
The solution enables the views for a case when you fund Portfolio Epics (Projects) and should be installed when you use the parameter "Work": "Portfolio Epic Funding" in the Budgeting: Structure solution. The views in the solution are designed to support Portfolio Stakeholders and Project Managers (or Portfolio Epic Owners) in the activities related to portfolio investment planning, funding Portfolio Epics (Projects), and tracking actual labor and non-labor expenses through the months, quarters, and years.
There are the following phases of a budgeting process:
- Budget Target - describes the company's initial idea of distributing funds across Portfolios and defining guardrails (Run vs Grow, CapEx vs OpEx).
- Budget Proposal - describes budgets proposed by Project Managers or Portfolio Epic Owners based on the funds needed to implement Projects or Portfolio Epics.
- Budget Approval - comparing the numbers in a Budget Target and Budget Proposal reflects the final decision on the investment into each Portfolio.
- Actuals - shares information about labor and non-labor expenses related to a Portfolio and Portfolio Epics.
While every company process slightly differs from another, all the activities fit one of these processes.
Step 1: Set Budget Targets
Budget Target describes the company's initial idea of distributing funds across Portfolios and further between Portfolio Epics. It's done based on the company vision and strategy for the following year's top-down. It answers the following questions:
- How much do we plan to invest in each Portfolio?
- How will this be distributed across Portfolio Epics?
Portfolio Owners usually perform budget targeting. Their main goal is to split the Target Budget across different Portfolios, define guardrails, and set what percentage of capitalization should be headed to, as well as the grow and run targets.
Portfolio Owners will handle planning on the Budget Targets dashboard, where you enter a Target Budget for a Portfolio and then for each Portfolio Epic.
Target CapEx and Opex (Percentage) define desired capitalizable and non-capitalizable expenses. Target Grow and Run (Percentage) – desired Run vs Grow expenses percentage on a Portfolio and each Portfolio Epic (Project).
Target Budget In Scope for Portfolio is a sum of Portfolio Epic (Project) Target Budgets. It's used to see if we distributed the total Portfolio Budgets properly and didn't over or under-plan it. It will be highlighted in red if the sum of Portfolio Epic Target Budgets will be more than a Portfolio Target Budget, meaning we have planned to distribute more funds than available.
You can also enter the numbers on a Portfolio Annual Budget detailed view -> Budgeting tab:
Portfolio Epic Owners will see and can update the information about Target Budget of a specific Portfolio Epic on a Portfolio Epic Annual Budget view.
Step 2: Budget Proposal
Budget Proposal is provided by Portfolio Epic Owners or Project Managers and includes information on how much funds are needed to implement a Portfolio Epic in the upcoming Year.
It answers the following questions:
- What resources are needed to implement a Portfolio Epic?
- What are the forecasted funds for Labor Costs and necessary Non-Labor Expenses?
There can be different ways of calculating a Proposed Budget for a Portfolio Epic: based on User and Team Work Allocation, Headcount, Portfolio Epic estimates, or other parameters (using additional solutions), or manually entered in this solution if the numbers come from another system or are approximately guessed by Portfolio Epic Owners.
The Proposed Budget consists of a Proposed Labor Budget and a Proposed Non-Labor Budget (defines expected non-labor expenses, such as Software, Hardware, etc.).
Budget Proposal - Labor
The Proposed Labor Budget usually reflects how much money is needed for labor expenses. Here you can use one of the following solutions:
- Proposed Budget based on Work Allocations (b82de5e7-4b6e-48b0-aa7c-c533d423711a), where Project Managers would create User, Team and/or ARTs Work Allocations, defining the needed people for a project, desired period and percentage.
- Proposed Budget based on Headcount (22c6f9f4-9d5e-49d3-b9cc-c3bc025d245b), where Project Managers would define the needed annual Headcount (number of people of required Job Profiles and Locations), and Forecasted Cost will be calculated based on Blended Rates.
Calculated Costs will be distributed across Portfolio Epic Monthly Budgets and roll up to Quarterly and Annual Budgets. Thus, we'll see the Proposed Labor Budget on a Portfolio Epic Annual Budget.
Budget Proposal - Non-Labor
The Proposed Non Labor Budget will be formed based on the Expenses Proposed amount. First, you'll create the estimated Non-Labor Expenses, defining the needed amount. The Expenses will be connected to the respective Month, Quarter and Year and be shown as a total Annual Proposed Non-Labor Budget.
Step 3: Budget Approval
Comparing Target Budget and Proposed Budget for each Portfolio on a Budget Approval dashboard, Portfolio Owners decide if they will go with the initial Target Budget or increase/decrease and distribute it differently across Portfolios.
Further, the budget is distributed across Portfolio Epics. In the Approved Labor Delta and Approved Non-Labor Delta fields, you can see the difference between a budget approved for the Portfolio and the total budget approved for Portfolio Epics in the Portfolio so that you know you approved the correct total budget across Portfolio Epics.
There can be a situation where a Portfolio Epics Proposed Budget is much higher than a Portfolio Target Budget. Portfolio Owner needs to decide whether we will go with the suggested scope and increase a Portfolio Budget or decrease the scope by removing some Portfolio Epics.
On the same dashboard, you can also check whether Target Portfolio Guardrails match the planned Portfolio Epics CapEx/OpEx and Run/Grow parameters.
Step 4: Actuals
Costs represent Labor Costs. They can be calculated based on spent Hours and people rates, imported from a different financial system or entered manually. The Costs will be split into CapEx/OpEx, and Run/Grow to see aggregated by each category for a Portfolio Epic and a Portfolio.
Expenses represent Non-Labor Expenses. You'll enter Actuals, which will also be split by the above categories.
The total Actuals will be aggregated for each Portfolio Epic and a Portfolio by Month, Quarter, and Year and can be viewed on the Actuals dashboard. Here you can focus on a specific Year, Portfolio or select a Portfolio Epic to focus on the details.
See how Targetprocess aligns and empowers business and IT with the help of powerful integrations.
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