Budgeting: Value Stream Funding Views 3.1.0

Requires the following solutions to be installed:

• Budgeting: Structure (7f7b1fec-480b-4011-9b4c-262cbc20303a)
• Budgeting: Automation Rules (a04a5dce-362f-499e-b168-1bf4621b53de)
• Budgeting: Metrics (877ad475-d0bc-4509-af72-11b5a6934895)
• Budgeting: Connection to Value Streams (d5f9a51c-12ce-42da-a938-c14f38c4391a)
• Budgeting: Connection to Solution Trains (d0b9ef51-c3b3-40ec-a668-75ae8274e8b5) if you use Solution Trains
• Budgeting: Connection to Agile Release Trains (ARTs) (3bd5f3c7-ce05-44c8-8b2d-02863522e5c1)
• Budgeting: Connection to Teams (29090431-bb10-4f5a-b472-99db69200d93) - if you would like to calculate Proposed Budget based on Team Work Allocations and Expenses

It can be extended by the following solutions (if you prefer Proposed Budget to be calculated automatically for Teams or ARTs and roll up to Value Stream Proposed Budget):

• Proposed Budget based on Work Allocations (b82de5e7-4b6e-48b0-aa7c-c533d423711a)
• Proposed Budget based on Headcount (22c6f9f4-9d5e-49d3-b9cc-c3bc025d245b)
• Budgeting: Proposed Budget Manual Entry (85007fc5-c6ca-40d6-8420-6eb5a10fc052)

It can't be used together with the following solution (as there only one vertical can be Funded):

• Budgeting: Product Funding Views (01fa67a3-faaa-477b-b057-8135cab12443)
• Budgeting: Portfolio Epic (Project) Funding Views (448b04d0-59ed-4e7b-9fc5-11a5796d020d)
• Budgeting: Solution Train Funding Views (7284f89d-34f2-4016-a85c-c9c02e790d3e)
• Budgeting: Agile Release Train (ART) Funding Views (741b1f77-0471-46b1-a39f-353337e3afc4)

It shouldn't be used together with the following solution:

• Budgeting: Value Stream Proposed Budget and Actuals Views (a3c905dd-ad13-4496-ac3d-c54890fa057e)

Can be used together with the following solutions (if you would like to see Proposed Budget and Actuals for Portfolio Epics, Products, Solution Trains, ARTs or Teams):

• Budgeting: Portfolio Epic (Project) Proposed Budget and Actuals Views (5a0acc91-50f7-4d65-be2f-154fc6cec394)
• Budgeting: Product Proposed Budget and Actuals Views (ae4872be-1088-403f-b058-9f69c62271bd)
• Budgeting: Solution Train Proposed Budget and Actuals Views (1e4bd6c1-9838-410f-9b9b-7c974bfdfec8)
• Budgeting: Agile Release Train (ART) Proposed Budget and Actuals Views (af5a5550-b908-455c-ac8b-6f9f79adcd42)
• Budgeting: Team Proposed Budget and Actuals Views (b7b13408-957b-4e7f-8464-774dc105131f)

The following diagram represents a visualization of these requirements:

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Solution Overview

The solution enables the views for a case when you fund Value Streams and should be installed when you use the parameter "Work": "People Funding" in the Budgeting: Structure solution. The views in the solution are designed to support Portfolio Stakeholders and Value Stream Owners in the activities related to portfolio investment planning, funding Value Streams, and tracking actual labor and non-labor expenses through the months, quarters, and years.  

There are the following phases of a budgeting process:

• Budget Target - describes the company's initial idea of distributing funds across Portfolios and defining guardrails (Run vs Grow, CapEx vs OpEx).
• Budget Proposal - describes budgets proposed by Value Stream Owners based on the funds needed to complete work planned for a Value Stream.
• Budget Approval - comparing the numbers in a Budget Target and Budget Proposal reflects the final decision on the investment into each Portfolio.
• Actuals - shares information about labor and non-labor expenses related to a Portfolio and Value Streams.

While every company process slightly differs from another, all the activities fit one of these processes.

Solution Flow

Step 1: Set Budget Targets

Budget Target describes the company's initial idea of distributing funds across Portfolios and further between Value Streams. It's done based on the company vision and strategy for the following year's top-down. It answers the following questions:

• How much do we plan to invest in each Portfolio?
• How will this be distributed across Value Streams?

Portfolio Owners usually perform budget targeting. Their main goal is to split the Target Budget across different Portfolios, define guardrails, and set what percentage of capitalization should be headed to, as well as the grow and run targets.

Portfolio Owners will handle planning on the Budget Targets dashboard, where you enter a Target Budget for a Portfolio and then for each Value Stream.

Target CapEx and Opex (Percentage) define desired capitalizable and non-capitalizable expenses. Target Grow and Run (Percentage) – desired Run vs Grow expenses percentage on a Portfolio and for each Value Stream. 

Target Budget In Scope for Portfolio is a sum of Value Stream Target Budgets. It's used to see if we distributed the total Portfolio Budgets properly and didn't over or under-plan it. It will be highlighted in red if the sum of Value Stream Target Budgets will be more than a Portfolio Target Budget, meaning we have planned to distribute more funds than available.

You can also enter the numbers on a Portfolio Annual Budget detailed view -> Budgeting tab:

Value Stream Owners will see and can update the information about Target Budget of a specific Value Stream on a Value Stream Annual Budget view.

Step 2: Budget Proposal

Budget Proposal is provided based on the information about funds needed to complete work (Portfolio Epics) planned for a Value Stream in the upcoming Year. 

 It answers the following questions:

• What resources are needed to complete work planned for a Value Stream?
• What are the forecasted funds for Labor Costs and necessary Non-Labor Expenses?

There can be different ways of calculating a Proposed Budget for a Value Stream: based on Team or ART Work Allocations, Headcount, Portfolio Epic estimates, or other parameters (using additional solutions), or manually entered in this solution if the numbers come from another system or are approximately guessed by Value Stream Owners.

Note: For now, only the Proposed Budget based on Work Allocations for Teams and/or ARTs is supported. It'll be calculated for each Team/ART and rolled up to a Solution Train (if it exists) and a Value Stream.

The Proposed Budget consists of a Proposed Labor Budget and a Proposed Non-Labor Budget (defines expected non-labor expenses, such as Software, Hardware, etc.).

Budget Proposal - Labor

The Proposed Labor Budget usually reflects how much money is needed for labor expenses. You can use the following solution to do that:

• Proposed Budget based on Work Allocations (b82de5e7-4b6e-48b0-aa7c-c533d423711a), where Project Managers would create Team and/or ARTs Work Allocations, defining the needed people for a project, desired period and percentage.

Calculated Costs will be distributed across Portfolio Epic Monthly Budgets and roll up to Quarterly and Annual Budgets. Thus, we'll see the Proposed Labor Budget on a Portfolio Epic Annual Budget. 

Further, by selecting which Portfolio Epics are taken in scope, we'll form Value Stream Proposed Labor Budget.

Budget Proposal - Non-Labor

The Proposed Non Labor Budget will be formed based on the Expenses Proposed amount. First, you'll create the estimated Non-Labor Expenses (for Teams or ARTs depending on what is the lowest level of Budgets you have), defining the needed amount. The Expenses will be connected to the respective Month, Quarter and Year and be shown as a total Annual Proposed Non-Labor Budget.

Step 3: Budget Approval

Comparing Target Budget and Proposed Budget for each Portfolio on a Budget Approval dashboard, Portfolio Owners decide if they will go with the initial Target Budget or increase/decrease and distribute it differently across Portfolios. 

Further, the budget is distributed across Value Streams. In the Approved Labor Delta and Approved Non-Labor Delta fields, you can see the difference between a budget approved for the Portfolio and the total budget approved for Value Streams in the Portfolio so that you know you approved the correct total budget across Value Streams.

There can be a situation where a Value Stream Proposed Budget is much higher than a Portfolio Target Budget. Portfolio Owner needs to decide whether we will go with the suggested scope and increase a Portfolio Budget or decrease the scope by removing some Portfolio Epics.

Step 4: Actuals

Costs represent Labor Costs and Expenses represent Non-Labor Expenses. They will be aggregated from ART or Team Costs (based on the lowest level in the Budgeting hierarchy you use). 

The total Actuals will be aggregated for each Value Stream and a Portfolio by Month, Quarter, and Year and can be viewed on the Actuals dashboard. Here you can focus on a specific Year, Portfolio or select a Value Stream to focus on the details.

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Version 3.0