PPM - Process of Financial Planning in a Bucket

[former_member301510]

Hi Experts,

I want to understand the process of Financial planning in Bucket.

Although I have gone through SAP help but could not understand completely.

What is the purpose of "Initial Amount" for a Group and Distribution Amount? Attached screen shot.

Do both have same purpose? How both are linked to each other?

Normally, the long projects may run for more than 1 year. How would we forecast the costs for those many years all together?

When we move to next year and there is another project running till another year, do we need to extend the period (or finish date) for Financial planning?

I believe, the Financial planning is forecasted every year for a Bucket/Item (From-To data need to be changed every year). The value of respective year can be added to previous year Financial planning by choosing "Action Type" as "Add".

financial-planning.jpg

Best regards,

Sandeep

[sammar81 · Accepted solution]

Initial amount is the estimate which is taken as a ball park figure before any real estimation has happened in the system. This value will definitely add up to your detailed estimates.

ex. would be R&D bucket we know will spend some expense and we would like to put to them as Initial values and for other major expenses we want to drill down to each line item. It is not mandatory to keep any value in Initial amount. This can be left blank..

regards

Sammar

[former_member301510 · Accepted solution]

Thanks a lot Sammar for your help.

[sammar81]

In PPM, the buckets will have dates from let's say today till next 10 years..which means you can do your planning from today till 2029.

Now if you have three projects which are finishing in 2022 and 3 more starting in 2023 you can have it..

The planning depends upon how you define dates in additional data in PPM. and also how you will plan whether it is annualy or monthy etc..

hope this clears your doubt..

[former_member301510]

Yes Sammar. Thanks.

Last question, what does "Initial amount" refers to?

What is the purpose of that column/field?

Why I am asking because if a user enters Forecast amount in Initial amount along with automatic monthly/yearly distribution, it is adding to Grand total. That leads to confusion and inconsistency. How to avoid that?

I tried to hide column "Initial amount" using Open setting dialog but Standard SAP is not allowing stating "Fixed Columns cannot be changed".

Best regards,

[sammar81]

The distribution amount allows a user to distribute the entered Values for the set periods. lets say you want to distribute 10,000 for each FY year or within a year to each period/monthly or annually.

this allows you to reduce the time to manually enter value for each year.

The Bucket level planning will be done for longer periods.. If they have more projects after 3 years its okay, you should have your planning profile set in such a way that you can plan for 3 year in past and say 5 years in future..

[former_member301510]

Thanks Sammar.

I believe, you are referring PS planning profile. That setting is already in place.

But, how it is related to PPM Financial planning past years and future years planning?

I am still looking answer to my question "At the end of 3 years; they have some more projects. In that case, do they need to change Financial planning finish date? If yes, how will they differentiate those old 3 years forecast costs and new forecast costs for new initiatives/projects at Bucket level?"

Best regards,

[sammar81]

Hi Sandeep,

the financial planning at Bucket level is for all the initiative and Items ( Programs and Projects) a business is going to take up in that Line of Business ( if your Bucket denotes that).

Ex. Lets say you have a Bucket Named R&D. Which has some 5 initiatives and these 5 initiatives corresponds to 50 Projects..

Now at the Bucket level you will fix a budget for overall R&D say $ 50 Million for next 5 years. You can then distribute this amount for each year, equally or differently as the business sees fit.. No Best practice here.

Once you have done that, You plan for individual projects.. as R&D projects lasts for more than a year, At the time of creation of the Project you define a Start and End date which is more than 1 year..so that you can baseline your project..

As the project progresses you monitor the expenses and timeline and adjust your baseline with current progress.

Hope it helps.

Sammar

[former_member301510]

Thanks Sammar for your detailed explanation with an example.

I had a bit idea about that process but I am little confused here.

What is the purpose of "Initial Amount" for a Group and Distribution Amount as per screen shots attached previously?

Do both have same purpose? Are they linked to each other?

In our client's business, they use only 4 buckets which would consist relevant types of initiatives/projects e.g. Customer, Investment, Prototype Development, Corporate affairs. To my understanding, depends on their business processes they may do Financial planning every year or more than a year at once (e.g. 3, 5 or 10 years).

Till 3 years, it is fine.

Now, at the end of 3 years; they have some more projects. In that case, do they need to change Financial planning finish date? If yes, how will they differentiate those old 3 years forecast costs and new forecast costs for new initiatives/projects at Bucket level?

Best regards,