SPM - Budget

[Tommaso2]

Hi all,

I wonder which is the relation between budget in demand, project and portfolio?

• I know that a new budget can be created in a demand (indicating fiscal year, capex and opex budget) and same for project: once the demand is converted into a project, the budget is moved/duplicated? Any automation exists to reduce the budget for example if an expense line is processed and the actuals are generated?

• Which is the difference between the demand/project budget and the cost center? It is possible to link the expense lines to the cost center to monitor budget level? E.g. overbudget

• Budget can also arrive from Investment Fundings to demand/project and the project manager can ask for additional amount, correct?

Any other consideration about ootb budget functionalities and/or automation?

Many thanks!

Tommaso

[Mark Manders · Accepted solution]

* budget won't get less if you add costlines. That would be weird. Budget is the amount of money allocated for that project/demand. It can be adjusted based on other variables (adding from somewhere else or reducing to allocate somewhere else). But budget is what the total cost is going to be (or allowed to be). The actual cost will get closer and closer to the budget once the lines are added.

* again: why are you making the assumption that cost is influencing the budget? Cost center has the cost, and there you can see what part of the budget is already used. Budget is a static thing. What do you mean by 'over budget'? When a project is finished, you have the difference between total cost and budget and then you know if you stayed within budget or not. 

Looking at your questions, I think you need to define what you mean, because budget is something that is set. What can something cost. And yes, that can come from investment funding and if something happens that requires more money, you can add funding and with that raise the budget, or you can take budget away to allocate to something that is more important. Budget and cost are related, but not in the way you are describing. 

And a portfolio is a combination of projects that can be related to multiple programs. Depending on where budgets are set (Company, Program, Portfolio level), they can be allocated to projects. And the automation is often done on the Cost part, where project costs roll up to program/portfolio level to see if everything is within budget.

[Vinay3 · Accepted solution]

Hi @Tommaso2 please find my responses to your questions below:

1. A 'budget' is the approved funds to a project that a project manager is allowed to spend within. It is not expected to be reduced based on actuals but is expected to remain visible as a guardrail for the project manager to ensure the actuals do not go over it. The new financials screen shows  the comparison of latest forecast (sum of actuals + remaining planned cost for future) against the approved budget to point out if the project financials are within the budget.

2. The financials screens give the comparison of actuals and forecast with budget to monitor if the project is going over budget

3. Using Investment funding, Project manager can request funds to a top level investment like a portfolio and funds can be approved to the project as additional budget. 

In the New financial planning feature using the new Scenario planning financial screens in SPW, budget can be allocated to a project based on the latest forecast top down keeping the process light and avoiding overhead of traditional request/approve process.

If my response helped, please mark it correct and close the thread so that it benefits future readers.

[Mark Manders · Accepted solution]

* budget won't get less if you add costlines. That would be weird. Budget is the amount of money allocated for that project/demand. It can be adjusted based on other variables (adding from somewhere else or reducing to allocate somewhere else). But budget is what the total cost is going to be (or allowed to be). The actual cost will get closer and closer to the budget once the lines are added.

* again: why are you making the assumption that cost is influencing the budget? Cost center has the cost, and there you can see what part of the budget is already used. Budget is a static thing. What do you mean by 'over budget'? When a project is finished, you have the difference between total cost and budget and then you know if you stayed within budget or not. 

Looking at your questions, I think you need to define what you mean, because budget is something that is set. What can something cost. And yes, that can come from investment funding and if something happens that requires more money, you can add funding and with that raise the budget, or you can take budget away to allocate to something that is more important. Budget and cost are related, but not in the way you are describing. 

And a portfolio is a combination of projects that can be related to multiple programs. Depending on where budgets are set (Company, Program, Portfolio level), they can be allocated to projects. And the automation is often done on the Cost part, where project costs roll up to program/portfolio level to see if everything is within budget.

[Vinay3 · Accepted solution]

Hi @Tommaso2 please find my responses to your questions below:

1. A 'budget' is the approved funds to a project that a project manager is allowed to spend within. It is not expected to be reduced based on actuals but is expected to remain visible as a guardrail for the project manager to ensure the actuals do not go over it. The new financials screen shows  the comparison of latest forecast (sum of actuals + remaining planned cost for future) against the approved budget to point out if the project financials are within the budget.

2. The financials screens give the comparison of actuals and forecast with budget to monitor if the project is going over budget

3. Using Investment funding, Project manager can request funds to a top level investment like a portfolio and funds can be approved to the project as additional budget. 

In the New financial planning feature using the new Scenario planning financial screens in SPW, budget can be allocated to a project based on the latest forecast top down keeping the process light and avoiding overhead of traditional request/approve process.

If my response helped, please mark it correct and close the thread so that it benefits future readers.

[Tommaso2]

Hi! Thanks a lot for your message

You mention that for project this is available and I found it, great:

"The financials screens give the comparison of actuals and forecast with budget to monitor if the project is going over budget".

About about Demand? If I open a demand record, there's only Financials tab but I cannot see how to compare actuals/planned costs with the budget.

Many thanks,

Tommaso

[Vinay3 · Accepted solution]

The new financials page is available for Demands in the Portfolio planning workspace.

In the classic demand workbench overview tab, you can see budget, EAC, Planned, actuals  comparison