Best practices: Investment planning in Project Financial Planning

Project evaluation and selection

Most organizations have separate planning processes for taking in and evaluating new project requests with the goal to determine which projects to fund for the upcoming fiscal year. This process typically involves the following tasks (described in detail in the following sections):

• Capture project business case details
• Estimate required labor resources and project costs
• Use these estimates in support of project prioritization and cut-line analysis to evaluate projects against available resources
• Determine the subset of projects that will be funded

This process is typically done annually in advance of the upcoming fiscal year start.

Project planning and governance

The approved projects then transition to the next phase where project resources like project managers are assigned to start building detailed project plans and budgets. This work is done so that there's an established set of detailed costs and assigned labor resources to help govern the actual project execution and associated spend. As projects are executed and actual costs, effort and time data are captured, these actuals can be compared to the project budget during a regular (monthly) project forecast update.

Project Financial Planning provides specific features to support both phases. While these features are available in any plan, we suggest you create separate plans for each phase because of the differences in purpose and outcome of each phase, and the individuals and roles involved. By doing so, you can better optimize the users involved in each phase.

For example:

• Create an Investments Pipeline plan to capture project proposals and make funding and approval decisions. There's no need to create multiple versions of this plan, so you can simplify the change model and make bulk approvals of projects without individually submitting them.
• Then, create a separate Project Budget/Forecast plan (or plans) in which to manage detailed project budgets and monthly forecast updates.

After completing the project evaluation and selection process, publish the approved projects from your Investments Pipeline plan to reference data. See Edit and publish Reference Data tables. Doing so helps ensure that your Project Budget/Forecast plans are populated with just the approved projects, and not unfunded project proposals.

Manage the portfolio investments pipeline plan

It's a good practice to add all proposed projects to an Investments Pipeline plan. Then, use the investment pipeline to determine if projects should be approved or not. All of your project managers should have access to the investment pipeline so they can add their proposed projects via the Add Project button.

Then, the PMO and/or Finance staff (that is, the Budget Process Owners) decide which projects to fund using cut-line analysis, Gantt charts, and Portfolio view features of IT Project Financial Planning.

The List tab shows all projects added. In this view, use the cutlines to analyze proposed projects:

You can also use the Gantt, Portfolio, and Financial tabs to analyze proposed projects:

Once the projects' funding decisions are made, update their status to Approved, and push the updates to Reference Data. Then, the approved projects can be budgeted in detail. Once the Project Reference Data is published, everyone can see the projects in the List view.

Here is the full process for managing your portfolio investment planning budget. Links to detailed instructions are included.

1. Create a plan and name it Investment Pipeline Plan or something similar. See Create a budget plan or forecast.
2. Load the proposed projects into the Investment Pipeline. If you can, export the proposed projects from a source system, or work in the List view.
3. Otherwise, open the plan so it's visible to your project managers. See Open a plan or a forecast.
4. Instruct each project manager to log into Apptio and add their projects manually. See Add projects and initiatives to your portfolio.
5. Once all proposed projects are in Apptio, then the PMO and Finance department decision-makers can determine which projects to fund. The best views to support this step are:
   • Gantt and Financial views (see Visually asses project initiatives on the Summary page, Gantt Chart)
   • List view and cutlines (see Review project initiatives in the List tab)
   • Portfolio view (see Analyze demand vs. capacity on the Portfolio tab)
6. For approved projects, change their status from Proposed to Approved. See Review project initiatives in the List tab.

7. Push just the approved projects to Reference Data. To do so, on the List tab of the Summary view for all projects, use the Actions button, Publish to Reference Data command.

Manage the approved project's budget

It's a good practice to keep all approved projects in a budget separate from the investment pipeline plan described previously. Furthermore, we recommend you add new project proposals only to the investment pipeline and not to the project's budget so you don't hinder system performance. A good way to accomplish this is simply to disable Investment Planning in the Company Profile (this removes the Add Project button) once your investment pipeline plan is complete. See Edit the Company Profile.

The best way to add the detailed labor, contracts, and assets budget is to use the Expenses view. In this view (including all its tabs), project managers can see only the projects they own, as defined in by Cost Object Permissions.

In the Expenses view:

(1) Make selections from the drop-down menus.

(2) The quantity of the employee type will be used to allocate resources in the month between the start and end date.

(3) Data entered will automatically total at the bottom of each column.

Here is the full process for managing your approved project's budget. Links to detailed instructions are included.

1. Disable the Investment Planning feature of Project Financial Planning. See Edit the Company Profile.
2. Verify your reference data dimensions are up to date. See Manage reference data.
3. Create a plan and name it Approved Projects Budget or something similar. See Create a budget plan or forecast.
4. (Optional) If you want to control which project managers can see which approved projects, see Manage Cost Object Permissions reference data. Then, in the Company Profile, ensure that the Enforce View Permissions checkbox is selected. See Edit the Company Profile.
5. (Optional) Set targets for the approved projects. See Set financial targets.

6. If you have a source system for approved projects, load a baseline budget from that system. Otherwise, open the budget so the project managers can enter their detailed budgets. See Open a plan or a forecast and Enter or import line item data.

   TIP: To help ensure your project managers can work with as much detail as possible, we recommend they utilize the Labor, Contracts, and Assets tabs of the Expenses view.

7. Once your project managers have finished adding their detailed budgets, they should submit them to be reviewed for approval. See Submit a plan or forecast.
8. The Budget Process Owners (the PMO and Finance decision-makers in this case) should then review all submitted project budgets, and either approve or reject them following the standard approval process. See Review, approve, or return plans or Cost Objects.
9. Once all plans are approved, the budget for approved projects should be finalized so no more edits can be made. See Finalize a plan or forecast.
10. (Optional) Push the finalized budget to Costing Standard to review the data on the reporting surface. See Integrate with Cost Transparency.

Manage the approved projects forecast

It's a good practice to maintain a separate project forecast, regardless of your organization's forecasting cadence. To get started, import actuals from your portfolio or financial management system, or from Apptio Costing Standard. We recommend you to import actuals monthly to ensure all reporting is up to date. Then, create a forecast per month, and your project managers can adjust their budgets as needed.

Here is the full process for managing your approved projects' forecast. Links to detailed instructions are included.

1. Disable the Investment Planning feature of Project Financial Planning. See Edit the Company Profile.
2. Verify your reference data dimensions are up to date. See Manage reference data.
3. Import project actuals in .csv format either from your portfolio or financial management system or from Apptio Costing Standard. See Import and publish actuals.
4. In Spend Management, navigate to the correct month and then click the Open Month button to open the actuals and to make them visible to all users. See Import and publish actuals.

5. Create a forecast plan that uses the approved projects budget as its baseline, and name it "Approved Projects Forecast" or something similar. See Create a plan or forecast.

   TIP: The same Cost Object view permissions previously described for budgets apply to forecasts.

6. Open the budget so the project managers can see their variance, and if they were over or under budget for the month, quarter, or year. See Open a plan or a forecast.
7. Follow the approval process to submit all changes to the group Project Owners or the Budget Process Owners such as the PMO or Finance. See Review, approve, or return plans or Cost Objects. Once all changes have been reviewed and approved, the forecast can be finalized so no further changes can be made. See Finalize a plan or forecast.
8. (Optional) Push the updated forecast to Costing Standard to review the data on the reporting surface. See Integrate with Cost Transparency.