Managing financials for planning items in Portfolio Planning

  • Release version: Washingtondc
  • Updated February 1, 2024
  • 7 minutes to read
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    Summary of Managing Financials for Planning Items in Portfolio Planning

    Effective financial management in Portfolio Planning allows you to oversee budgets, cost plans, and actual expenses while generating labor costs and establishing financial baselines. This ensures you can analyze and compare financial performance for your planning items effectively within the Portfolio Planning Workspace. Key financial metrics include planned and actual costs, Estimate At Completion (EAC), and Estimate To Completion (ETC).

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    Key Features

    • Cost View: Manage cost plans and expense lines, track financial performance across multiple project levels, and aggregate data from sub-projects for comprehensive insights.
    • Baseline View: Create and compare financial snapshots to monitor changes. Baselines include data from all child projects, enhancing overall financial visibility.
    • Budget Allocation: Approve and manage budgets at various intervals, utilizing lean budgeting methods to ensure alignment with project expenses and future planning.
    • Simple Financials: Enter preliminary financial data without detailed cost plans, enabling quick updates and comparisons against baselines as actual costs are recorded.

    Key Outcomes

    By utilizing these features, ServiceNow customers can enhance their financial oversight, enabling informed decision-making regarding budgets and expenses. This leads to improved tracking of financial health across projects, better resource allocation, and the ability to respond dynamically to financial variances, ultimately supporting successful project and portfolio management.

    Manage budget, cost plans as forecasts, actual expenses as expense lines, generate labor costs, create financial baselines, and view, analyze, and compare the financial performance of your planning items at required cadence in Portfolio Planning Workspace.

    The comprehensive financials view helps you to understand planned and actual costs, Estimate At Completion (EAC), Estimate To Completion (ETC), total actuals to date, and so on, for the selected entity. You can manage cost plans and associate processed expense lines to reflect the actuals for a planning item.

    Export the financials data from Cost or Baselines comparison view as Microsoft Excel or a CSV file and share it with your stakeholders to review the financial performance of your planning items and portfolio.

    Cost view

    Forecast your planned costs, create and manage cost plans and expense lines to track the financial performance of your planning items, review the latest costs and actuals.

    Financials screen.

    In the Cost screen, you can:
    • As a Project Manager, you have the enhanced visibility and ability to manage the financial data across multiple project levels. Cost view of financials shows cost plans and expense lines from sub-projects, allowing you to track the finances.
    • The parent project widgets display the consolidated values of forecasted costs and expenses.
    • Identify and manage costs using the Project/Demand column for any sub project or demand directly from Cost view of the parent planning item.
    • Re-forecast all the cost plan values for future fiscal periods by double-clicking to edit the value in the least time scale view, either by month or by period.
    • Manage cost plans for your planning items. For more information, see Add, edit, or delete cost plans.
    • Add or edit expense lines for your planning items to record any planned or unplanned expenses. For more information, see Add or edit expense lines.
    • Generate labor costs for the fiscal period. For more information, see Generate labor costs.
    • Create and compare baselines to capture the financial snapshot of your planning items. For more information, see Create and compare financial baselines for demands and projects.
    • Configure widgets to get a high-level overview of the financial data for your planning item.
    • All financial details from sub-projects will be aggregated and displayed in the parent project's cost plans and widgets.
    Tip:
    Cost view gives you enhanced user experience to customize the left pane columns by using the personalize icon (Personalize gear icon.) and by saving user preferences to retain the customizations made to hide, view, or adjust columns, time scope viewing, and so on.

    Baseline view

    Create a baseline to capture a snapshot of the financial changes for your planning items. You can create on-demand baselines or at a cadence using a scheduler job.
    Note:
    Baselines created on the parent project will include the cost plans and expense lines from all of the child projects to calculate and give you a better breakdown of the financial performance of the projects and sub-projects.

    When you create a financial baseline for a parent project, the financial records of the child project are also calculated, which helps Project Managers to track the financial health of the projects at one place.

    Compare baselines to compare the difference in costs between latest status against a baseline or between any two baselines.
    Note:
    Each baseline is tagged with a number based on the order that they’re created. The Current Financials baseline captures the financials details in real-time and is always represented with a flag icon (Flag icon to indicate current baseline.).

    The baselines comparison view helps you to understand the variances between the two baselines.

    Baselines comparison view.

    Use the widgets when you compare baselines to view:
    • Two dedicated widgets for each baseline displaying the EAC.
    • Third widget displays the total variance between the EAC values of the selected baselines.
    • Fourth widget displays the top three variances contributing to the overall variance by cost type.
    The widgets and the header rows are color-coded to help you identify the selected baselines.
    Tip:
    Switch between different baselines from the comparison view by selecting the name of a baseline from one of the widgets.

    When you compare baselines, you get the list of cost plans with their associated costs types, EAC at full scope, and a breakdown view of actual expenses and planned costs.

    By default, the time scale of the breakdown view is set to Month.
    • Use the Time scale option to view the comparison breakdown view at monthly, quarter, and yearly levels.
    • Select Time scope to filter fiscal periods, data in the widgets, and the comparison table.
    The widgets and the header rows are color-coded to help you identify the selected baselines.
    Tip:
    Select the name of a baseline from the first or second widget to compare different baselines.

    Let's take an example of the comparison view of two baselines: 2023-10-01, Baseline A, and Current Financials, Baseline B.

    When you compare baselines, you get the list of cost plans with their associated costs types, EAC at full scope, and a breakdown view of actual expenses and planned costs.

    By default, the time scale of the breakdown view is set to Month.

    When you compare baselines, you get the list of cost plans with their associated costs types, EAC at full scope, and a breakdown view of actual expenses and planned costs.

    How actuals, planned, and EAC are compared between two baselines captured at different timestamps

    For a selected baseline, based on the creation date, the table shows Actuals values for the past fiscal periods from the created date and Planned values for the current and future fiscal periods.

    Consider a planning item scoped from July 2023 to June 2024. Baseline A is created on 2023-10-01. If you compare the Current Financials baseline in December 2023 to the baseline captured in October 2023:
    1. The baseline comparison view show Actuals vs Actuals columns from July 2023 to September 2023.

      Baseline comparison of actual vs actual costs.

    2. Planned vs Actuals for October 2023 and November 2023.

      Baseline comparison of planned vs actual costs.

    3. Planned vs Planned from December 2023 to June 2024.

      Baseline comparison of planned vs planned costs.

    Note:
    The columns are defined to calculate EAC, which is the sum of Actual costs till the last fiscal period and Planned costs from current to future fiscal periods.

    Budget allocation

    Portfolio managers can manage and approve the budget for planning items. The approved budget helps project managers to plan and meet the expenses to execute work.

    Plan and approve the budget for a shorter planning cycle at monthly, quarterly, or yearly level using the lean budgeting and funding feasibility. Lean budgeting helps Portfolio managers to track the value in return for the approved budget and to better plan the budget for future fiscal periods.
    Note:
    If the budget is allocated monthly, the total budget is rolled up to quarterly and yearly level. Similarly, if the budget is allocated at a quarterly or yearly level, the equal breakdown happens till monthly level.
    For more information on how to allocate, approve, and handle budget for planning items, see, Manage budget of your planning items in Strategic Planning.
    Tip:
    In the budget allocation view, Portfolio managers review the EAC to understand the financial projections made by Project managers and use the Copy cost as budget option to allocate the entire planned cost as budget.

    Choose the cost type as the attribute to allocate and approve the budget for individual cost types such as labor, non-labor.

    Project managers can view the approved budget at the required time scale by enabling the Budget vs cost (Budget vs cost toggle.) toggle in Cost view. As the work progresses and the actuals are captured, you can compare the budget and actual costs from the Budget vs cost view and reforecast the planned costs where the actuals are exceeding the budget using the inline edit feature at the required time scale.

    Product managers can compare the latest cost with the approved budget by Capex or Opex, cost types, and for the required time scale at monthly, quarterly, or yearly level. The comparison view provides insights to Product managers to locate any variance at expense type or cost type, and at which fiscal period. Product manager can leverage this information to request for additional budget from the Portfolio manager.

    You can migrate the budget of existing active projects and demands items from the Classic UI to Next Experience. Financials in the Next Experience has new budget data model that facilitates to store the budget at a detailed level by monthly breakdowns and cost types. You can migrate the budget for active projects and demands individually or by bulk using the scheduled job.
    Note:
    The migrated budget is captured in the sn_invst_pln_invst_budget table to enable the lean budgeting for required time scope.

    Simple financials

    Simple financials gives you the ability to enter the preliminary high-level planned capex, opex, benefit and so on from the Details page without capturing the costs plans from the Cost view. You can update the simple financials values as required until you have the planned and actual costs captured.

    Simple financials view in the Details page of Strategic Planning workspace.

    Using the baseline feature, you can capture these simple financial values in a baseline and compare them against any existing baseline. You can:
    • Reforecast simple financials and compare the by selecting the Current Financials from the list of baselines.
    • Capture the planned and actual expenses as the project progresses and compare any financial baseline with simple financials baseline to track the financial performance of the planning item.