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datathat savesourworld
ENFOS Webinar
with Environmental Risk Communications, Inc.
Three Critical Financial Controls for Re...
Contains ENFOS confidential and proprietary information.
2
About Us
ERCI builds tools, training
and reports for duty
holde...
Contains ENFOS confidential and proprietary information.
3
Speaker Background – Roger Well, C.P.G.
 Currently leading cus...
Contains ENFOS confidential and proprietary information.
4
Speaker Background – John Rosengard
 21 years at ERCI; founder...
Contains ENFOS confidential and proprietary information.
5
 Opportunity Statement
 Financial Controls Overview
 Work Br...
Contains ENFOS confidential and proprietary information.
6
Write the Caption Contest
Contains ENFOS confidential and proprietary information.
7
Opportunity Statement
Contains ENFOS confidential and proprietary information.
8
What Every Executive Wants
High Visibility (aka “No Surprises”)...
Contains ENFOS confidential and proprietary information.
9
Convergence of Practices & Competencies
Contains ENFOS confidential and proprietary information.
10
The Charge of Internal and External Auditors
 Enforce general...
Contains ENFOS confidential and proprietary information.
11
Matching Spending to Liability Burn-down
 Remeasure liability...
Contains ENFOS confidential and proprietary information.
12
Financial Controls Overview
Contains ENFOS confidential and proprietary information.
13
Business Objectives
(Governance, Control, Certification, Risk ...
Contains ENFOS confidential and proprietary information.
14
Integrated Business Process Management
Enables Financial Contr...
Contains ENFOS confidential and proprietary information.
15
Work Breakdown Structure Control
Contains ENFOS confidential and proprietary information.
16
The “Harmonized” WBS Explained
 Definition: A WBS that is uni...
Contains ENFOS confidential and proprietary information.
17
The “Harmonized” WBS Example
WBS Level
Forecasts &
Budgets
Pro...
Contains ENFOS confidential and proprietary information.
18
Work Commitment Control
Contains ENFOS confidential and proprietary information.
19
 Definition: Monitoring and controlling the expenditure
commi...
Contains ENFOS confidential and proprietary information.
20
Commitment Control Example
Phase Activity
Current Year
Plan
CY...
Contains ENFOS confidential and proprietary information.
21
Spend Control
Contains ENFOS confidential and proprietary information.
22
The Spend Control Explained
 Definition: Monitoring and contr...
Contains ENFOS confidential and proprietary information.
23
Spend Control Example
Phase Activity
Open
Commitments
Purchase...
Contains ENFOS confidential and proprietary information.
24
In Summary: Putting it Back Together
Forecasting
& Budgeting
V...
Contains ENFOS confidential and proprietary information.
25
Questions and Answers
Contains ENFOS confidential and proprietary information.
26
Thank You for Attending
For follow-up, please contact:
Lacey O...
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Three Critical Financial Controls for Environmental Reserve Management

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You have a well conceived strategy for your remedial approach. You may even have a lifecycle estimate and various proposals from your environmental consultants. You are ready to execute. But hold on, you may be missing out on the opportunity to manage the project and all of the uncertainties within a framework that will give you better visibility and a higher probability of success.

In this presentation, we will discuss three financial controls that you can put in place to more effectively and efficiently layout the cash flow forecast, manage work commitments, spending against the plan, and reserve balances. The three controls include:

• Establishing and enforcing a work breakdown structure across forecasts, work commitments, and spend
• Controlling work commitments against the reserve balance
• Controlling spend against work commitments

Published in: Business
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Three Critical Financial Controls for Environmental Reserve Management

  1. 1. datathat savesourworld ENFOS Webinar with Environmental Risk Communications, Inc. Three Critical Financial Controls for Reserve Management February 24 and 25 , 2015
  2. 2. Contains ENFOS confidential and proprietary information. 2 About Us ERCI builds tools, training and reports for duty holders to recognize, measure and display their environmental and asset retirement obligations. ENFOS is a cloud software platform that expertly manages all of the complexities of remediation and decommissioning - from the financial to the technical.
  3. 3. Contains ENFOS confidential and proprietary information. 3 Speaker Background – Roger Well, C.P.G.  Currently leading customer deployments on over 100,000 projects and $10B in forecasts and transactions through the ENFOS enterprise platform  26 years of environmental remediation and decommissioning experience in various technical and managerial roles  Author of recent white papers:  The Case for the Enterprise Environmental Liability Management System  Operational Risk Management for Environmental Remediation  Operational Excellence for Environmental Remediation Programs  M.B.A., Keller Chicago  M.S., University of Toledo (Hydrogeology)  B.A., Monmouth College (Geology) Roger Well Executive Vice President & COO roger@enfos.com Naperville, IL
  4. 4. Contains ENFOS confidential and proprietary information. 4 Speaker Background – John Rosengard  21 years at ERCI; founder/creator of Defender software suite  14 US corporate remediation teams (>60 CPA audits)  3300 unique liabilities  200 decision analysis projects  4 US port authority remediation teams (>10 CPA audits)  Counterparty/non-performance risk tracking system  MBA, Northwestern  BS, Georgetown John Rosengard President & CEO, ERCI john@erci.com Oakland, CA
  5. 5. Contains ENFOS confidential and proprietary information. 5  Opportunity Statement  Financial Controls Overview  Work Breakdown Structure Control  Work Commitment Control  Spend Control  Questions and Answers Agenda
  6. 6. Contains ENFOS confidential and proprietary information. 6 Write the Caption Contest
  7. 7. Contains ENFOS confidential and proprietary information. 7 Opportunity Statement
  8. 8. Contains ENFOS confidential and proprietary information. 8 What Every Executive Wants High Visibility (aka “No Surprises”) Strategic Alignment with Corporate Value Drivers Improved Effectiveness and Efficiency of Operations Data-Driven Decision Making and Narrative 1 2 3 4
  9. 9. Contains ENFOS confidential and proprietary information. 9 Convergence of Practices & Competencies
  10. 10. Contains ENFOS confidential and proprietary information. 10 The Charge of Internal and External Auditors  Enforce generally-accepted accounting principles • Relevant • Faithful Representation (fair value)  Encourage good capital stewardship • Measure similar liabilities in similar ways • Confirm spending matches liability burn-down • Anticipate repeats of lessons learned
  11. 11. Contains ENFOS confidential and proprietary information. 11 Matching Spending to Liability Burn-down  Remeasure liability periodically at “fair value” • Remedy implemented • Regulator/community accepted remedy • Counterparty default risk resolved/paid  Remember: remaining liability ≠ uncommitted funds $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 Q1 Q2 Q3 Q4 Liability Commitment Spending
  12. 12. Contains ENFOS confidential and proprietary information. 12 Financial Controls Overview
  13. 13. Contains ENFOS confidential and proprietary information. 13 Business Objectives (Governance, Control, Certification, Risk Management) Operational System (front-end) ERP System (back-end) Internal Controls Automated Controls Reporting Controls Security Controls Manual&Procedural Controls Efficient and Sustainable Operations Technology People A Business Model for Control Systems
  14. 14. Contains ENFOS confidential and proprietary information. 14 Integrated Business Process Management Enables Financial Controls Forecasting & Budgeting Vendor Proposals Purchases Invoices & Recovery Commitments can’t Exceed Plan Balance Spend can’t Exceed Commitments LEVEL 1 – “Phase” LEVEL 2 (optional) – “Activity” LEVEL 3 (optional) – “Element” LEVEL 4 (optional) – “Component” WORK BREAKDOWN STRUCTURE Common thread across all processes Finance Workflow Summary 1 2 3
  15. 15. Contains ENFOS confidential and proprietary information. 15 Work Breakdown Structure Control
  16. 16. Contains ENFOS confidential and proprietary information. 16 The “Harmonized” WBS Explained  Definition: A WBS that is uniformly applied across all financial activities from forecasting through spending on every project in the portfolio  But not necessarily applied to all WBS levels in all financial activities (to be clarified)  Do not confuse the company-wide WBS to project-level work tasks contained in a contractor scope-of-work  The more granular the detail, the more financial control (there may be a point of diminishing return)  The operational system contains the detail, the ERP system may not
  17. 17. Contains ENFOS confidential and proprietary information. 17 The “Harmonized” WBS Example WBS Level Forecasts & Budgets Proposals & Purchases Invoices Example  Phase X X X Remedial Implementation  Activity X X X Groundwater Remediation  Element X X Engineering Design  Component X Direct Labor  When the work is invoiced, the lowest level of details are known and should be tracked uniformly across the portfolio  When forecasts are made, because of the uncertainty, lower levels of detail may be useful for cost buildup but not for financial control purposes  Harmonized WBS provides the highest visibility and the baseline data required for additional financial controls during project execution stages
  18. 18. Contains ENFOS confidential and proprietary information. 18 Work Commitment Control
  19. 19. Contains ENFOS confidential and proprietary information. 19  Definition: Monitoring and controlling the expenditure commitment against a budget and balance  A harmonized WBS is essential if the control is to be made in any detail below the overall total budget/balance  Four key financial variables used for the control: 1. Current Balance (e.g., of the Reserve or Budget) 2. Open Commitments 3. Available to Commit 4. New Commitment Request Amount (i.e., the Proposal)  All four variable amounts change through time as work progresses – many moving parts The Commitment Control Explained
  20. 20. Contains ENFOS confidential and proprietary information. 20 Commitment Control Example Phase Activity Current Year Plan CY Expenditure CY Balance Open Commitments Available to Commit Site Characterization Project Management $1,000 $1,000 $0 $0 $0 Subsurface Investigation $5,000 $5,000 $0 $0 $0 Monitoring & Sampling $6,500 $3,000 $3,500 $1,500 $2,000 Reporting $5,000 $2,000 $3,000 $3,000 $0 Interim Corrective Measures GW Plume Control $12,000 $2,000 $10,000 $5,000 $5,000 Water Disposal $5,000 $2,500 $2,500 $2,500 $0 Remedial Options Appraisal Hydrogeological Assessment $10,000 $4,000 $6,000 $6,000 $0 Alternatives Evaluation $4,000 $0 $4,000 $0 $4,000 Engineering Study $25,000 $10,000 $15,000 $15,000 $0 Construct & Startup GW Remedial System Install $350,000 $0 $350,000 $0 $350,000 OM&M Plan $1,000 $0 $10,000 $0 $10,000 H&S Plan $5,000 $0 $5,000 $0 $5,000 System Startup $18,000 $0 $18,000 $0 $18,000 TOTALS $456,500 $29,500 $427,000 $33,000 $394,000 Configuration Options: 1. Current Year by WBS 2. Current Year by Plan Total 3. Lifecycle by WBS 4. Lifecycle by Plan Total Commitment Controls Control Monitoring Hard Stop/Control
  21. 21. Contains ENFOS confidential and proprietary information. 21 Spend Control
  22. 22. Contains ENFOS confidential and proprietary information. 22 The Spend Control Explained  Definition: Monitoring and controlling expenditures against a work commitment that may be an entire project or a subproject  A harmonized WBS is essential if the control is to be made in any detail below the overall total budget and work commitment scope of work detail  Three key financial variables used for the control: 1. Commitment Open Amount 2. Available to Spend 3. Expenditure Amount being Processed  May be linked to Earned Value Management
  23. 23. Contains ENFOS confidential and proprietary information. 23 Spend Control Example Phase Activity Open Commitments Purchase Order 1 Balance Purchase Order 2 Balance Invoice 1 (PO1) Invoice 2 (PO2) Site Characterization Monitoring & Sampling $1,500 $1,500 N/A $1,500 N/A Reporting $3,000 $3,000 N/A $2,000 N/A Interim Corrective Measures GW Plume Control $5,000 $5,000 N/A $6,000 N/A Water Disposal $2,500 N/A $2,500 N/A $1,500 Remedial Options Appraisal Hydrogeological Assessment $6,000 $4,000 $2,000 $4,000 $2,000 Engineering Study $15,000 $5,000 $10,000 $5,000 $12,000 TOTALS $33,000 $18,500 $14,500 $18,500 $15,500 Configuration Options: 1. PO Total 2. PO and Change Order Individually 3. By WBS Level 4. Rate Sheet Item Quantity Level Validated Rejected Spend Controls
  24. 24. Contains ENFOS confidential and proprietary information. 24 In Summary: Putting it Back Together Forecasting & Budgeting Vendor Proposals Purchases Invoices & Recovery Commitments can’t Exceed Plan Balance Spend can’t Exceed Commitments LEVEL 1 – “Phase” LEVEL 2 (optional) – “Activity” LEVEL 3 (optional) – “Element” LEVEL 4 (optional) – “Component” WORK BREAKDOWN STRUCTURE Common thread across all processes Finance Workflow Summary 1 2 3
  25. 25. Contains ENFOS confidential and proprietary information. 25 Questions and Answers
  26. 26. Contains ENFOS confidential and proprietary information. 26 Thank You for Attending For follow-up, please contact: Lacey Orr (630) 689-0220 x17 lacey@enfos.com

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