How The PMO Professionals helped an organisation to level the financial performance playing field
The Situation
The Client organisation had grown by acquisition, and had several different ways of managing project finances (one per acquired organisation). This led to confusion when it came to project finance reporting, comparison of project financial performance and prioritisation during the annual financial planning period. The PMO Professionals were tasked with devising a single approach to suit the needs of all stakeholders.
The Objective
The brief from the Group Head of Transformational Change was simple: “Make it so that Finance get the information they need, and so that we are comparing apples with apples financially”
The Approach
Working closely with stakeholders, The PMO Professionals:
- Gathered information on the approved project budgets, the actual costs recorded on the Finance system, and the methods being used by project managers to manage project finances.
- Agreed with Finance a set of principles supporting a consistent approach to cost and benefit forecasting and tracking (e.g. defined terms, accruals basis, including/excluding VAT, internal day rates, etc.) to enable fairer financial comparison of projects across the entire Group project portfolio, regardless of whether project spend is CapEx, OpEx or Exceptional.
- Communicated the principles to project managers for them to use during forecasting for annual project portfolio financial planning
- Introduced an annual project portfolio financial planning approach and tools to enable easy data aggregation, grouping, filtering and comparison of project forecasts across the portfolio (by division, benefit type, etc.)
- Developed a project prioritisation approach that offsets project attractiveness (benefit, contribution to strategic objectives, etc.) against project challenge (size, cost, complexity, business impact of change, etc.) to arrive at a single prioritisation score.to help identify candidates for start/defer/stop.
- Set up processes to improve the capture of actual project costs (to support accurate cost capitalisation), including project manager validation.
- Introduced monthly reporting of key project financial measures (ATD, ETC, EAC, Variance against budget) to enable assessment of individual project and overall portfolio financial performance.
The Outcome
- All projects priority scored using a single mechanism, and compared financially on a level playing field.
- Increased transparency of project financial performance across the portfolio.
