Monday Dec 23, 2013

Unlock the cash trapped in your contingency budgets

It is generally accepted that more companies fail due to lack of cash flow than for want of profit. This is an inevitable position because whilst profit is a vital indicator of performance, its generation does not necessarily guarantee an organization’s growth, development, or even in some cases, survival. For the C-level executive, cash flow also has a particular impact in the planning of short or long-term investment strategies, where decisions are more often focused on anticipated funding requirements rather than projecting levels of profitability. Capital budgeting is the process for managing cash flow, where the basic unit of analysis is the investment project. From a finance perspective, projects and programs represent a series of contingent cash flows over time, whose amount and timing are only partially under the control of the executive. The amount of expenditure these consume directly influences the level of available working capital, which is the primary benchmark for measuring a company’s operational liquidity. The eternal challenge for organizations is keeping this liquidity in the positive position needed to support day-to-day operations – i.e., to service both maturing short-term debt and upcoming operational expenses – and for maintaining the flexibility to respond to emerging opportunities. 

Read this complimentary paper and explore the ability of organizations to augment cash flow in their operations by addressing a key area of stagnant cash reserves – contingency budgets. It will argue that the collective pot of contingency monies is conservatively estimated at between 5-10% of total project operating costs across the portfolio. To free up even a small portion of these budgets can therefore enable organizations to expand their portfolios to decisive effect. Finally, it will also detail the way forward, and how a more flexible approach to setting contingency budgets requires the adoption of a portfolio approach to risk management.

Monday May 06, 2013

Five Globalization Risks and How to Manage Them

Globalization may offer enterprises exciting new growth opportunities in emerging markets, but it can also introduce a complex array of operational risks. The challenge is that without the right infrastructure in place to confront these risks, international projects can immobilize an organization and lead to the biggest consequence of all—putting the company out of business.

“Investing in the Unknown?” is a new report produced by The EPPM Board that explores five key challenges facing global project delivery. Produced for enterprise project portfolio management (EPPM) professionals, the report examines the challenges of operating across borders, and details the role of EPPM solutions in maintaining effective visibility and control.

A shifting risk profile. The increased scale of globalized operations is matched by the increased level of risk, ranging from fluctuations in interest and exchange rates to supply chain piracy. As these risks become more strategic, they frequently involve greater levels of uncertainty that can impact capital investments. Organizations therefore need access to a more comprehensive risk framework, and the ability to analyze different scenarios and model specific risks and costing options.

Regulatory obstacles. Fast-changing regulations and local policies can have a dramatic impact on the profitability of cross-border investments, heightening uncertainty in rapid-growth markets. By adopting a global platform for managing the project portfolio, greater visibility can be gained into the procedures for overcoming regional barriers—and for developing suitable contingency plans.

Cultural differences. Managing workforces when operations are separated by thousands of miles, international time zones, and cultural and religious differences can be an exacting challenge. To cope, the central organization must be able to refine portfolio management and create an infrastructure that maintains the diversity of international teams while also empowering local delivery.

Resource constraints. Increased competition for local talent often results in skills shortages in key functions. This creates increased demand for effective planning processes allied to dynamic resource management capabilities. While the tools exist to support these activities, the trick is to review intelligence from a consolidated global perspective. EPPM solutions provide a framework for adopting this perspective and for balancing the risks of individual projects across the portfolio.

Problem flexibility. The growing interdependence of international value chains makes the consequences of major systemic disruptions difficult to manage. Increased visibility into value chain performance, and processes for creating a collaborative, two-way flow of information are the vital ingredients for retaining flexibility and responsiveness. In addition, executives must be able to select the type and frequency of data they review and zoom in on any critical obstacles.

EPPM Is Essential
To succeed in globalization, organizations must manage challenges and risks at an executive level. As a result, EPPM technologies that enable a more integrated, top-down approach to managing projects and resources are becoming critical components in many globalization strategies.

Read the full report and learn about Oracle’s full portfolio of EPPM solutions.

Friday Jan 18, 2013

Executive Visibility: Four Key Ways to Improve Project Information

Gaps in key pieces of information are causing many C-level executives to make important decisions about projects without fully understanding the inherent risks and opportunities.

This is one of the main findings in
“Putting the Truth on the Table,” the latest in a series of reports about strategic project portfolio management by The EPPM Board, an international steering group of senior industry executives, academics, and commentators.

This report analyzes the root causes of information gaps and concludes that executives should be focusing on four areas: evolving corporate culture to gain more-accurate information, analyzing opportunity as well as risk, achieving greater visibility into supplier operations to help mitigate risk, and implementing practices that improve the relevance of information presented to management and enhance the overall health of the project portfolio.

1. Evolve the Culture Toward Truth and Visibility
The EPPM Board found that senior leaders might not get the insights they need due to how staff members report issues and problems. One example is excessive optimism, which was apparent when the Cranfield School of Management analyzed 400 projects and found no reports of impending glitches. To address behavioral challenges such as these, the C-suite must have technologies in place to collect information anonymously, such as through mobile devices and apps.

2. Analyze and Weigh Opportunity As Thoroughly As Risk
Operations and delivery teams often concentrate on identifying and managing risk, but this approach can miss important opportunities. Using enterprise project portfolio management technology can identify opportunities for turning portfolios into strategic assets that produce measurable benefits. The portfolio can then be viewed as an investment that can be advanced in different directions as the fundamentals behind a strategy change.

3. Reach Beyond Organizational Walls for Insight into Supplier Operations and Capabilities
Suppliers and contractors are often judged solely by their ability to meet deadlines and manage costs, but this limited criteria may conceal underlying risks. The C-suite should insist on detailed reports about how effective major suppliers and contractors are at delivering projects when confronted with change. This level of visibility enables executives to make strategic decisions on the suitability of third parties beyond mere cost.

4. Implement Project Assurance Practices
Project assurance provides impartial assessments about the necessary resources and risks needed to ensure successful implementations of capital investments. But some organizations fall short when developing unbiased and comprehensive analyses. Creating the new role of chief project officer may provide a resource who can gather and present data in a way that is relevant to C-level leaders.

The full report delves into each of these areas in detail—and reinforces The EPPM Board’s findings that improving C-level insight is critical to enabling better business decisions.

Download “Putting the Truth on the Table” by The EPPM Board.

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