Project Portfolio Budgeting 1.0.0

Requires the following solutions to be installed:

• Years, Quarters, Months, Weeks and Days (4fb0e9dd-40e7-4dd2-ba10-548b86ecebeb)
• Agile Release Trains (ARTs) (edcffe31-75d3-40b8-9b16-6fbfa380466e)
• Colored and Formatted Units – Core Mashup (cb9ca2ee-8ba2-4e91-bab8-9c0ccd7199b3)

It can be extended by the following solutions:

• Actual Costs and Expenses (69a324ca-faa6-4c65-9b81-2d1571565f8c)
• Manual Cost Entry (fa9588ff-c837-419e-954b-e1e487787689)
• Actual Costs based on Time Records and User Rates (b69cd45d-2c80-44dc-afa6-c4abfd135870)
• Costs Roll Up (0bbe950e-dc15-4354-a255-42bc956c0e19)

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Solution Overview

Project Portfolio Budgeting solution is designed to support Portfolio Stakeholders and Project Managers in the activities related to portfolio investment planning, funding portfolio epics (or projects), and tracking actual labor and non-labor expenses through the months, quarters, and years.  

Right now, most organizations use multiple tools to accomplish this task. Targetprocess Project Portfolio Budgeting solution allows for doing it all in one tool. It also enables Portfolio Stakeholders and Project Managers to do better project budget planning, as with this solution actuals are based on exact team estimates and actual hours spent doing the work. Finally, it enables Portfolio Owners to fund those initiatives or projects based on information from Project Managers and invest the right amounts across the portfolio. 

There are the following phases of a budgeting process:

• Investment Planning - describes the company's initial idea of distributing funds across portfolios.
• Funding Intent - provides information on how much funds are needed to implement initiatives planned in a portfolio.
• Funding - comparing the numbers in an Investment Plan and Funding Intent reflects the final decision on the investment into each Portfolio.
• Actuals - shares information about labor and non-labor expenses related to a portfolio.

While every company process slightly differs from another, all the activities fit one of these processes. The default solution enables the budgeting process for Portfolios, Portfolio Epics (or Agile Release Trains, which is an option to plan budgets provided in the solution). It can be adjusted to manage budgets and actuals for other levels of work (such as projects, initiatives, or other high-level work items) or people structures (such as value streams, departments, or other people organizations).

Solution Structure

The solution uses the structure of Portfolio -> Portfolio Epic / Agile Release Trains and their respective Annual, Quarterly, and Monthly Budgets. We will enter all the budgeting information on Annual, Quarterly, and Monthly Budgets of Portfolio, Portfolio Epic, and Agile Release Train to plan investments and track costs by Year, Quarter, and Month. Then, the totals across the Years will be summed up and shown as not editable information on a Portfolio, Portfolio Epics, and Agile Release Trains. This approach allows to quickly retrieve the needed financial information by Month, Quarter, and Year when needed.

Generate Annual, Quarterly, and Monthly Budgets

First, we need to generate Annual, Quarterly, and Monthly Budgets. To make budgeting information available to a limited group of people, we need to hide Budgets in a separate Portfolio (Project) called "Budgeting" (or use any other name which suits your organization). All the Budgets will be created in this project by default. By assigning people to this project, you will provide access to the Budgeting details. People who don't have access to the "Budgeting" Portfolio (Project) won't see anything on the Budgeting tab at Portfolio, Portfolio Epic, and Agile Release Train views.

• Create a "Budgeting" portfolio
• Copy a "Budgeting" portfolio ID
• Go to Settings -> Automation Rules
• Replace the Project ID parameter in the following rules:
  • "Start Budgets creation when "Generate Budgets" is pushed"
  • "Create hierarchy from Annual and Quarterly budgets"
  • "Delete Budgets when AgileReleaseTrain or PortfolioEpic is deleted"
  • "Create budgets for new/updated AgileReleaseTrain, PortfolioEpic, Portfolio"
• Save the rules

• Go to "Generate Budgets for Years" view
• Click the "Generate Budgets" checkbox on a Year you need to generate Budgets for.

Annual, Quarterly, and Monthly Budgets will be created for all existing Portfolios, Agile Release Trains, and Portfolio Epics.

Note 1: When a new Portfolio, Agile Release Train, or Portfolio Epic is created, Budgets will be created automatically for the current year and future years for which Budgets have already been generated.

Note 2: The levels for which you'd like to enable the Budgeting solution are configurable. Please get in touch with us if you'd like to implement it for different entity types.

Note 3: If you don't see Budgets on the Budgets Overview, Investment Planning, or any other views, please open a view setup -> go to Portfolios filter -> Select All the budgets in it.

Budgeting Step 1: Investment Plan

An investment plan describes the company's initial idea of distributing funds across Portfolios and further between Portfolio Epics and/or Agile Release Trains. It’s done based on the company vision and strategy for the following year 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?

Planning can be handled by Portfolio Owners on the Investment Planning view, where you enter a Planned Investment for a Portfolio and then for each Portfolio Epic.

Planned Investment Distribution will show the total amount intended to distribute across Portfolio Epics in a Portfolio. Distribution percentage – a percentage of distributing the Planned Investment, Distribution Delta – the difference between the Planned Investment and Planned Investment Distribution. It'll be highlighted in red if > 100% and <0, respectively, meaning we plan to distribute more funds than available.

We can also enter the numbers on a Portfolio Annual Budget detailed view -> Budgeting tab:

Totals across all the Years will be summed up on a Portfolio view -> Budgeting tab:

Portfolio Epic Owners will see and can update the information about Planned Investment of a specific Portfolio Epic on a Portfolio Epic view -> Budgeting tab as well as on Portfolio Epic Annual Budget views.

Budgeting Step 2: Funding Intent

Funding Intent provides information on how much funds are needed to implement Portfolio Epics within a Portfolio for each Year. It can be calculated based on team allocation, 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 numbers are entered on a Portfolio Epic Annual Budgets level and summed up on a Portfolio level to see the total funding needed.

 It answers the following questions:

• How much work do we plan to complete in each Portfolio Epic?
• What are the necessary funds?
• How does this sum up in each Portfolio?

Portfolio Funding Intent is a sum of Annual Labor and Annual Non Labor budgets intended to be funded for each Portfolio Epic. We enter this information on an Annual Budget of a Portfolio Epic.

The totals are summed up for the Portfolio Epic as well as for Portfolio Annual Budgets and Portfolio. This allows us to see how much funds are needed for the entire Portfolio during the planning Year.

CapEx and OpEx Budgets

Suppose you need to split CapEx and OpEx budgets. In that case, you can enter the budget planned for capitalizable costs into the CapEx Budget field on an Annual Budget of a Portfolio Epic. OpEx Budget will be calculated as Labor Budget - CapEx Budget.

Budgeting Step 3: Funding

Comparing an Investment Plan and Funding Intent for each Portfolio Epic, we decide what would be the final funding. Funding Delta visualizes a comparison between the Funding Intent and Actual Funding numbers. It's green if we funded more money than funding intent and red if vice versa.

When we decided how much we fund each Portfolio Epic, we'll see the total Funding Distribution (sum of Funded values of all the Portfolio Epics in a Portfolio) on an Annual Budget of a Portfolio.

With the numbers of Planned Investment, Funding Intent, and Funded Distribution across Portfolio Epics, we can fund the entire Portfolio. Funded value has to be more than Funding Distribution to be safe if actual costs get higher than planned ones, but probably less or equal to the Planned Investment.

Funding Delta shows how much funds we have compared to already Funded to Portfolio Epics – green means we have extra budget, red – we funded to a Portfolio less than we total funded to the Portfolio Epics in this Portfolio. Funding Percentage shows a percentage comparison of Funded and Funding Distribution values, showing if we fund to a Portfolio more or less than we funded to Portfolio Epics.

The information about Planned Investment, Funding Intent, and actual Funding can be entered either on Portfolio and Portfolio Epic Annual Budget detailed views or on the Investment Planning view in the left menu.

Budgeting Step 4: Actuals

Actual Costs (Labor) and Expenses (Non Labor) are either entered manually (see the Manual Cost Entry (fa9588ff-c837-419e-954b-e1e487787689) solution) or summed up from Costs and Expenses entered manually, calculated from work costs (additional solutions are needed) or imported into Targetprocess from other systems (see the Actual Costs and Expenses (69a324ca-faa6-4c65-9b81-2d1571565f8c) solution).

When using the Manual Cost Entry solution, the information will be entered manually on Monthly Budgets for Portfolio Epic and Agile Release Trains. This approach is usually used when data is provided by financial departments and not calculated in Targetprocess. 

When using the Actual Costs and Expenses solution, the costs and expenses are created as separate objects and connected to the Monthly Budgets of Portfolio Epics and Agile Release Trains. These entities can be imported into Targetprocess representing detailed cost and expenses, if tracked in another system, or calculated in Targetprocess automatically based on actual work completed (usually based on hours spent or estimate and people rates).

The information will be aggregated on Quarterly and then Annual Budgets and shown on Portfolio, Portfolio Epic, and Agile Release Train views, as well as Remaining Budget details for each category.