Strategic financial management in portfolio and project management (PPM) is a process by which financial resources are allocated to projects based, among other things, on their strategic value.
The goal is to optimize the organization’s financial resources and achieve its strategic objectives.
This process includes identifying appropriate projects, determining their strategic value, assessing their financial viability and allocating financial resources based on this assessment. The process also includes monitoring the performance of projects to ensure that they are on track and that financial resources are used effectively.
Through a new financial grid available in both portfolios and projects, the three levels are linked. Different types of money can be easily compared e.g. ‘Budget versus Forecast’ of ‘Gepland versus Besteed’. Through scenario planning, the impact of various situations can be analyzed before they are effected. This provides easy insight and the opportunity for financial steering at all levels.
Financial Portfolio Planning
3 months to 3 years (or longer) ahead.
By looking far ahead, you know roughly how much money will be needed in the future. This allows you to determine early on whether there are sufficient financial resources for the projects the organization wants to implement. Recognizing potential financial problems early gives time to resolve them.
Set the capacity and amount of financial resources needed against the contribution that a (potential) project makes to the organization’s goals and themes. This provides the insight needed to prioritize.
Financial Project Planning
3 months to 1.5 years ahead.
Once a project is started, the project manager can create a detailed schedule. This detailed planning leads to an accurate picture of the costs required over time. This detailed picture can be fed back to the portfolio so that “Financial Portfolio Planning” can be honed.
Op basis van deze detailplanning kan vanuit het Portfolio een budget aan het Project toegekend worden.
The financial situation is periodically reported to the portfolio through a current forecast.
Financial Project Execution
Daily project direction.
While executing the project, finances should be managed. During implementation, for example, expenditures come in that can be measured against planned costs.
A deviation can lead to a change in the “Financial project planning” which in turn can lead to a change in the “Financial portfolio planning”. Excessive deviations will potentially lead to an RFC. For example, these RFCs can be handled by the appropriate procedures in the organization.
Tip: When handling a change request, use the ‘Approval Workflows’ functionality built into FCC. This ensures that the formal process is followed and that the capture about the decisions takes place in the tool.
