Comprehensive project management requires the establishment of project budgets and forecast versions that can run in parallel to project execution. It provides a static view of a project at a particular time and allows for dynamic forecasting from that point onwards. The budgeting and forecasting capabilities, enhanced by tools like the EAC Workbench, provide greater accuracy, improved decision-making, and increased transparency throughout the project lifecycle. By continuously updating forecasts based on real-time data, companies can achieve more precise financial planning, make better decisions, and ensure transparency and accountability.
IFS Project Budgeting and Forecasting offers the following capabilities:
The creation of a project budget typically begins by creating a forecast of the expected project costs and revenues by rolling up project estimates into budget lines. During the early project definition phase, the scope is often not fully detailed, so the preliminary budget is defined at a high level, such as the project level. As more details become available, the budget can be refined accordingly. At a minimum, an initial budget includes the cost/revenue elements and their associated amounts.
Budget/forecast lines represent the expected cost/revenue amounts, regardless of when these amounts are expected to be incurred. To identify when costs or revenues will impact the project, it is possible to distribute these amounts across accounting periods, a recommended but optional process. Spreading the amounts can be done manually or with user-defined spread profiles.
The adjusted ETC amount and the committed amount are spread over the accounting periods between the forecast line Start Date and End Date. When spreading with a profile, you can either use the profile defined on the budget/forecast line or override it with a different profile. ETC can only be spread for the part that is not connected to a resource forecast or contract change order. The committed cost can only be spread if its associated cost elements are enabled for spreading. The Cut-Off Date on the project budget/forecast version must align with an existing accounting period for the project’s company.
Once a budget/forecast line is entered with the required information, the responsible person reviews and confirms it by setting its status to Confirmed. After all lines are reviewed and confirmed, the entire budget undergoes a review by the financially responsible person.
Next, the forecast undergoes an optional approval process. This can be done quickly by allowing the forecast owner to approve it directly, or through a pre-defined approval routing where individuals and roles can approve the forecast in parallel and/or in sequence. Once all steps in the approval routing are completed, the forecast is set to Approved.
If the approved forecast is intended to be set as a budget, the person responsible for the forecast can set it as the active budget. Since there can only be one active budget at any point in time, any budget currently set as the active budget will be replaced by the new active budget.
Once a budget has been set as the active budget, it can optionally be used to control project procurement transactions against the project budget. All procurement transactions will be checked against the remaining budget amounts based on the budget control rules. These rules ensure that costs do not exceed the budgeted amounts and thresholds. It should not be possible to spend money if the rules are set up to prevent spending when insufficient funds are available. This proactive measure prevents users from running processes that would cause external costs to be posted to the project, exceeding the budget.
Throughout the project execution, regular budget reviews and forecasting simulations are necessary. These reviews can be scheduled at predefined times or conducted ad-hoc based on project changes. New forecasts can be created from previous ones or from scratch, incorporating existing project cost and revenue information relative to a given point in time by creating and connecting a snapshot.
A forecast goes through a similar process as the budget with regards to having the forecast lines reviewed, confirmed and the forecast approved.
Assessing the ETC (Estimate to Complete) and EAC (Estimate at Completion) involves creating new forecasts and utilizing real-time data on project progress. This includes costs incurred, work completed, and remaining activities and tasks.
Updating the ETC can be done when there are changes in the scope of work, when new information about project progress or efficiency becomes available, or periodically based on project review cycles or milestones. Similarly, EAC may need to be updated when actual costs significantly deviate from the forecast, after updating the ETC to reflect the new total estimated cost, or when there are changes in project assumptions or external conditions affecting costs.
The snapshot provides a static view of the project status relative to a specific point in time, known as the Cut-Off Date. It captures all project activities and connected objects with their reported cost/revenue and progress. When connected to a forecast or an EAC Workbench, the snapshot matching process can automatically update ETC or EAC values depending on the settings, ensuring that the most current project data is reflected in the forecasts.
The Assign ETC feature allows for the assignment of budget/forecast ETC values from one level to another or between branches of a structure. This ensures control and comparison at the correct level, with the possibility of adding notes to every move. If multicurrency budgeting and forecasting and/or project currency is used, it is possible to change the currency code between the source and destination lines, validated against either the Base B&F Currency or the Project Currency.
The EAC Workbench can be utilized in this process, providing a structured and efficient method for predicting and building EAC values for both costs and revenues. It integrates system-generated and user-entered data, handles calculations based on the project’s Active Budget, and retrieves costs and revenues through snapshots, ensuring accurate and reliable data.
It is possible to connect a resource forecast to a budget/forecast version. When a resource forecast is connected, the ETC Connected column will be added to the list of project forecast lines. If a change has been made in a resource forecast after it has been connected to a project budget or forecast, you can update the project budget or forecasts with this newly changed amount using the Update command. This ensures that the ETC Connected column in the project forecast lines is recalculated for the resource forecast.
Manage changes by connecting contract change order forecasts to a budget/forecast version. When a contract change order forecast is connected, the ETC Contract Change Order column will be added to the list of project forecast lines. If a change has been made in the contract change order forecast after it has been connected to a project budget/forecast or an EAC Workbench, you can update the project budget/forecast or the EAC Workbench with this newly changed amount using the Update command. This ensures that the ETC Contract Change Order column in the project forecast lines is recalculated for the contract change order forecast.
Regular monitoring and variance analysis are essential for effective budget management. Periodical reviews involve conducting regular check-ins to assess project performance against the budget, analyzing variances between budgeted and actual costs, identifying root causes, and taking corrective actions as necessary. Detailed reports are provided to stakeholders, highlighting the current financial status of the project, any deviations from the plan, and proposed adjustments to stay on track.