Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Core P3M Data Model and Business Integrated (P3M) Governance – Finance

13 views

Published on

The Core P3M Data Club was formed to create a data standard for portfolio, programme and project management. This enables us to more effectively deliver business integrated governance for Business as Usual and Change. This means our journey from Main Board objectives, targets and challenges can be delivered through portfolios, programmes and projects in the context of finance, management teams, support and assurance more easily and effectively. This will deliver more strategy outcomes, greater business agility, lower management overhead and efficiency benefits.

This document outlines the assumptions we make around how Finance Teams collaborate to provide finance and commercial support for portfolios, programmes and projects alongside commitments for business as usual activity. We offer a business agenda for Commercial and Finance Teams that would harmonise investment support, resource allocation and benefit value management across services, product / asset management, innovation and change delivery. It presents management information definitions that we believe will support the Commercial and Finance Team’s business agenda and the Projects / Programmes / Portfolios business agendas.

From this, we have derived a data model that would support the MI for the whole P3M business agenda and have integrated this with the Core P3M Data Model.

For a high res version click here - https://1drv.ms/w/s!AscRj7Bfp6vQgoh7xM8ojEBZdLlFiQ?e=gnl48m

Find out more and collaborate here: https://www.linkedin.com/groups/13651399/

Published in: Leadership & Management
  • Be the first to comment

  • Be the first to like this

Core P3M Data Model and Business Integrated (P3M) Governance – Finance

  1. 1. Page 1 This work is licensed under a Creative CommonsAttribution-ShareAlike 4.0InternationalLicense.
  2. 2. Page 2 Commercial & Finance Function Assumptions Commercial andFinance roleshave responsibilitiestoreportactivitiesthroughtheirown functional organisationstoensure regulatorycompliance andprotectshareholder (e.g. stewardshipof a3rd party’scapital – whichmaybe the taxpayer) andstakeholderinterests againstbad (orfraudulent) activitiesof the business. Thisisa crucial role within organisationasitallowsshareholderstoinvestknowingthat there isdataquality/ integrityfree fromerrors, theirinterestsare protected,orat leastassuredthatthe businessisactingingoodfaith. Thisguide recognisesandbuildsonthe legal requirementsand goodpracticespromoted by the accountingandcommercial professional bodies andsetsoutsome assumptions abouthow commercial andfinance functionscan be deployedwithin projects, programmesandportfolios basedonanexample scenario.Inanutshell,thisistooversee and advise oninvestmentsand change governance atall levelsof P3Mandto report on the performance/riskexposure todeliverthe anticipated/targeted/promisedoutcomes. Thisoverarchingrequirement sometimes createsnatural suspicion orevenconflictbetweenthe projectteamandthe finance functions.Inthe recentyears insome organisations,the role of BusinessPartnerhasbeencreatedtonotonlybridge the gap betweenthe BusinessorProjectManagerand the Shareholder’srepresentativebutalsoapplyskillstoimprove the projectperformance andoutcomes.Thisisprimarilyachieved throughassistingtoinstil confidence andunderstandingin all key stakeholders,tosecure fundingandassistinmanagementof riskandchange. The Commercial andFinance isactive inall corporate governance bodies.Withinthe P3Mdomain,thisincludes somekey duties: Accountingrules&reporting  Establish,andcommunicate tostakeholderscommonfinancial reportingrules(e.g.accounting),andreportingframework,ensuringrelevant, consistentoverperiods,andup-to-date financial informationisprovidedtostakeholders fortheirinformation,andreview  Supportdevelopment/collationof annual budgetatall levelsof P3Mand track financial performance againstit  Structure cost performance datacollection,storage andreporting all levelsof portfolio.The datacode schemeseachareausesmustalignat a suitable pointsothat achievementandremainingfigurescanbe alignedagainstspendingtothe same point.If theydonot align,atrue picture of From APMDirecting Change
  3. 3. Page 3 performance (spend,value /revenue,remainingcost,contingencyusage etc.andthe indicatorsdramfromthem) will be unclearmeaningdecisions to be takenon performance andlookaheaddatamay be adverselyaffected Investment&riskevaluation  Carry out or supportinvestmentappraisals(includingsettingrulesforbusiness cases)  Cost,uncertaintyandriskforecastingtosupportcontingencymanagement Advisory/businesspartnering  Advise businessdecision makingonthe apportionmentof fundingtothe respective portfolios,programmesand projectsviaFinance Plans. Please note:The mechanicsof howfundingis madeavailableto ProjectTeamsat thelowest level is notin scope of this exampleandwill entirely dependon the structureof the organisation  Negotiationandimplementationof contractchange (where commercial specialistsare needed)  Provide commercial approvals/ oversightonprocurementandproposalstocustomers andtrack and controlsthe formal conversationsbetween suppliers,partnersandcustomers  Ensure compliance forall commercial andlegal mattersarisingwithinthe project,e.g.oversightandmonitoringof compliance withprocurement and regulatorylaw Monitoring  Supportthe comparisonof baseline forecasttoassignedbudgetand supportconversion intoresource profiles(materialsandhumanresources - permanent/temporary/part time staff & contractors)  Setand leadthe cadence forperformance reporting.Whilemoderntechnologyallowsustohave “live”data – for governance,thisalsoneedstobe “consideredandreviewed”live datawhichhasundergone adjustment,analysisandagreementbeforedecisionmakingcanhappenwithit. (AIis startingto automate adjustmentandanalysisaspectstothis.)  Provide projectandcostforecastand accountingsupportenablingleaderstounderstandtheir baselineand progress  Manage financial accountingand cashflow processesand control of costsbetweenportfolios,programmes&projects throughactivitiesincluding cost recognitionforlabourandmaterialsand,inconjunctionwithprojectdeliverablesandcommercial approvals,invoice preparation  Reportand supportrevenue recognitionand marginmanagement
  4. 4. Page 4 Whilstmostof the importantactivitiesandroleshave beencaptured,additional dutiesmaybe performedbythe Commercial and Finance functions, but individualsmustmaintainadherence tothe overarchingresponsibilitiestothe business’sshareholdersandinvestors (includingsignificantdebtholders) to ensure thattheirinterestsare managedfairly. In our example, P3MFinance supporthas3 horizons andpossible involvementineach withinaproject/programme – eitherdirectlyorviasupportfroma local PMO: Pre-Delivery Delivery Post-Delivery BenefitsPlan/RevenuePlan (with confidence levels if possible) BenefitManagementSetup FurtherBenefitRealisation andreporting Cost Plan,CostManagementSetup (dependingon whetherthe workis fundedasproject,productand howthe accountabilityisset) ProcurementSupport,Payments TransferCostManagementto ‘Runthe Organisation’ processes. BusinessCase / InvestmentAppraisal / BidApproval Revenue PlanningandInitialrecovery FurtherRevenue recovery Finance PlanandBudgeting Cost control andPerformance Reporting,trend reporting Cost control closure Risk/ SensitivityAnalysis Risksupport/ Change Control Close outthe projectfinancially.LessonsLearned exercise. Determinationof informationneeds (content,cadence,recipients) Implementationof efficientreporting framework Reporting(BAU) Where a local PMO providessupport, coordination withFinanceisessential toensure processanddatavalidityunderanyreportedmaterials. At the Organisationlevel, Finance will maintainaninvestmentviewof the full investmentprofile indevelopmentandaninvestmentviewof nascent,fragile returnsbeingnursedintovibranthealthyflow.Theseinvestments will includeadevelopmentcostandchange cost whichaligntoprojectsand
  5. 5. Page 5 programmes.Theymayalsoinclude paybackperiod orriskexposure wherethere istransferfrom‘Change the Organisation’ spendingtoannualised ‘Run the Organisation’spend which(Change) Portfolios,Asset/ProductLifecycleManagersmayor may notconsider,butFinance must.(Runthe Organisation mattersare notin scope here) Everyinitiative’ssponsor(portfolio,programme andproject) mustensure the Finance andCommercial dataiscollated intoandmaintainedinaFinance Plan. Each will indicate financeneeds andcontainthe finance commitment secured(especially forwhenfinanceisprovidedinstagedreleases). All these supportactivities maypresentthe FinanceGroupwitharesourcing challenge (althoughitwasnotedabove that Finance BusinessPartners are sometimesdesignatedtoprovide supportforlargerareas). Overseeingthis, the Finance Group(whichmaychairan Investment Committee) mustensure thisisreviewedandagainstthe whole portfolioat appropriate pointsinthe organisation’sgovernance procedures.Thesepoints of revieworgateswouldtypicallystartwitha candidate initiative being approvedforfundingthroughtothe benefitsflowsbeingdeclaredastable part of future annualised(orother‘normal budgetingcycle’organisational planning. In orderto oversee this, dataisneededfromthe aggregatedFinancePlans,corporate booksandrecords.If thisisdrawnfromdata inreliable systems,the overall picture canbe managedeasily.However, where dataismanaged manually viaspreadsheetsandotherdocumentformsdata availabilitymaybe slow,andaccuracy maybe unreliable. Operationally,the keyassumptionforfinance isthatthe businessoperatesonaweeklyupdate cycle,amonthlyperformance cycle,andaquarterly directioncycle. Insome businessesthere maybe nocadence at all,butthisoftenmeans differentdatatypesare notupdatedtothe same point.For example, atanymomentintime plansmaybe workin progress,time collectionwill be asof lastFriday(at best),purchase orders formlastweekprobably haven'tbeenreleasedyet,invoices won'thave beenprocessedimmediatelyand forresourcing, the demandpictureiswhatwasintended–the effectof problemsandissuesmaynotbe apparent yet.In anycase - the official Finance costpositioncomesoutmonthly. Whileitmightbe nice topull a live report - the integratedpicture won'tbe live forgovernance,andlackof cadence can simplymeanmore effortandlackof confidenceindatainany case.A ‘live’ reportpulledadhoc withnoadjustments, canalsomeanextrawork,will likely be incomplete,andthuspotentiallymisleading.
  6. 6. Page 6 For BusinessIntegratedGovernance,we understandwhatisneededtosupportMainBoardfrom Portfolios, ProjectsandProgrammes,andthisgivesa requirementtoPortfolios,whichgivesarequirementtoprojectsandprogrammes.Thisprovidesaninformationandintegration implicationforfinance and managementteams,causingasupportnecessityfromBusinessSupportandAssurance. Agenda Dashboard – (P3M) Finance Review Finance Managementtakesplace atdesks,inworkshops,overphone calls,face toface meetings,embeddedwithinteamsoroutof a finance service team. It isassumedthat eachFinance functionwill haveaperiodiccycle of statusandreporting. It isassumedthat Finance Partnersmaybe workinginsome areasof the business,andwillbe aware of the local finance performance picture,butitis assumedthatwithinthisbusinesscadence,the finance picture asawhole will be assembled,andthisgivesrise toan example agendafor(P3M) Finance Review. The contentof a periodicFinance Review maybe wide andvariedwithmattersthatdon’tconcernthe P3Mperspective directly.Similarly,itisexpected that Project/ Programme Sponsorswill oversee progressvalue vscostvsbenefitanalysisperProject/Programme /Portfolio.Itisexpectedthatfinance will provide aservice tothe Project/Programme / Portfolio, itmayprovide local assurance orassurance inanoversightrole forInvestmentCommittee or Main Board levels.The contentsof the Finance Review beloware therefore constrainedtothe role of Finance asthe service (otherrolesare covered elsewhere)toProject/Programme / Portfolio,nothingmore.
  7. 7. Page 7 Hence,the definitionof:  Risk,Action,Issue,Decisionreview.Whatisthe progressonmattersactioned/ decidedlasttime? Example new issuesmayinclude changesincurrentNetPromoterscore,suggestions forprocess/ procedure change thatwoulddelivervalue tocolleagues etc.  AllocatedSpendreview.Are all AccountabilityNodesspendinginlinewithpriority/allocation? What are the issues/actions?  NewFinance requests.Ontopof existingagreedfinance plans,whichnewfinance plansare emerging(forchange oroperational workstreams),whichstagedrelease of fundingrequestsare there?Are theywithinbudgets?Are new budgetlineitems(andfundingchallenges) needed?Basedon knownpriorities –whatare the fundingre-allocationoptions/implications?Whatare the issues/ actions?  CustomerPortfolio –isthe portfoliospendingwithinitsallocation,isrevenue/ margin performance asexpected?Whatisthe forecast,andisthat withinallocation?Whatare the issues/ actions?  Investmentsintargetfuture businessposture –isthe (each) portfoliospendingwithinits allocation?Whatisthe forecast,and isthat withinallocation?Isthe benefitrealisationhappening,and are (forexample)cashable andothervalue benefitsaccruingasexpected?Whatare the issues/ actions?  Local PortfolioCosts –are there anyunexpected operational coststoaccommodate?  Long Range Finance Plans – are there otherStrategicinitiativesonthe horizonforwhichFinance willneedtobe preparedtoprovisionfor(e.g. merger,acquisition,disposal).Inthe contextof the review - whatare the issues/actions?  Communications/Escalations–Whichmattershave arisenthat needescalationwithwhicharea? Please note thisdoes not attempt to define a full FinanceReview, but it does offera pragmaticapproachto supportingservicesto Portfolios, Programmesand Projects.
  8. 8. Page 8 MI Implication The Agendaabove givesusthe followingimplicationforManagementInformationelements. Title Purpose Content RAID Review To enable trackingof Risks/Actions/ Assumptions/ Issues/Dependencies aroundthe portfolioaroundthe Finance Team,recordingof decisions Finance relatedRisks/Issues/Assumptions/Deliverables/ Dependenciesbyexception (methodforfilteringdowntofinance relatedrisks TBDaccording to organisationneedandoperating guidelines) AllocatedSpend Review(Spendv Allocationv PlannedReport) To enable exceptionreportingtoidentifywhen portfolioitemsare notconsumingtheirallocatedfunds (more or less) Tabularcost data. Spend.Allocation.Plannedspendneeded.Variance calculationsand indicators NewFinance RequestReview- Finance Plan Report Expressionof finance needfromCustomer,Corporate and OperationsPortfolioitems. Tabularcost data. SpendAllocation.Plannedspendneeded PortfoliosReview Statuson KeyStrategicObjectives(Progress,RAID). Strategy Changes(linktostrategicdirectionfromPDG). Environmentchanges. Ad hocanalysisViathe PortfolioRegister,e.g. Update from PDG, OperationsGroup,relevantnews/events, CommentaryonKeyStrategicObjectivestatus,KeyRAIDreview Compliance Report Exceptionsfromwithinthe P3Mfinance operations where due processorstandard hasnot beenfollowed to a degree thatwarrants resolutionatthe Finance Leadership level Ad hocanalysis,e.g. cost figuresincorrect,resource requirementsincorrect,benefit value statusoutof date There may be continual opportunitiesforprocessimprovement–to enhance use of or replace proceduresformaximumoverall results. Sometimespeoplebenefitfromtrainingandincentivisingor discipliningandsometime bonussesforinitiativestoamendor replace acceptedprocedures.
  9. 9. Page 9 However,asdata iskeyto decisionmaking,shouldissuespersist, the data matter shouldbe escalated. PortfolioItem HighlightReport May be accessed for reference. Identify Risks/Actions/Assumptions/Issues/ Decisions/Dependencies around: • KeyMilestonesanddependencies • Spend(Funding) • Risks,Issues,Changes • Revenue /Benefitsprogress • Confidence (Indicators) • Trendalerts Abilitytodrill intoPortfolioitemdetailsif necessary Viathe PortfolioRegisterfromPortfolioDeliveryPlans: Statuson KeyMilestones(Progress,RAID,Forecast,Dependency, EV(?) /Quantity) Spend(allocationvbudgetvspendvsremaining)–fromthe PortfolioFinancial Plan.Profiledbudget,analysedasappropriate CAPEX/ OPEX BenefitProgress,Forecastandperformance –fromthe Portfolio Benefitsrealisationplan - Mainbenefits,scaleof impact,profile, measurementmetrics Confidence Status (UsedinConjunctionwiththe RAIDlog.) Finance Comms Report EscalationstoPPG or OperationsGroup Ad hocanalysis Messagesagreed Notedactions,decisionsfromthe meeting Resources Thissectioncontainslinkstodetailedpresentation/backup material tothe narrative above The detailsof the assumptionsandMI definitions andExamplesof reportscanbe provideduponrequest.

×