INTRODUCTION TO PLANNING, BUDGETING AND FORECASTING MODELS ROME LA SAPIENZA 2017, MAY 11 TH

Transcription

1 INTRODUCTION TO PLANNING, BUDGETING AND FORECASTING MODELS ROME LA SAPIENZA 2017, MAY 11 TH

2 AGENDA ENTERPRISE PERFORMANCE MANAGEMENT RECAP INDUSTRIAL PLANNING AND CONSOLIDATION MODELS CASE STUDY 2

3 Information Decisions Actions ENTERPRISE PERFORMANCE MANAGEMENT - OVERVIEW Enterprise Performance Management (EPM) is a strategy and key capabilities required to make decisions and take actions to drive shareholder value. Business Strategy Monitor Target Setting Total Returns to Shareholders Operate An effective EPM capability enables to focus and align the organization to the key drivers of its strategy, to plan and forecast based on these drivers, to measure results, and course correctly accordingly. 3

4 THE EPM FRAMEWORK PERFORMANCE MANAGEMENT FRAMEWORK Target Setting Strategic Plan & Objectives Forecasting & Monitoring Determine Key Measures of Success Determine Key Value Drivers Refine Corporate Vision & Strategy Objectives Portfolio Value Assessment Set Targets for Key Measures of Accountability Cascade Targets to Lower Level Metrics/ Organization Incentives & Rewards Data structures & controls Enablers Integrated IT Architecture Standardized processes Leadership & governance Planning & Budgeting Develop Action Plans, Re-allocate Resources and Update Forecast Review Performance with Executive Management Monitor Key Measures of Business Performance Close and Consolidate Books and Report Actuals Develop Plans to Achieve Targets Allocate Resources (capital & people) to Achieve Plans Review, Challenge & Finalize Plans & Budgets Source: Accenture 4

5 PB&F PROJECT APPROACH TO IMPROVE EFFICIENCY AND EFFICACY Assess & Design (conceptually) Design (detailed) & Develop Deploy 4 Manage A typical project approach is made by four main Activities, each of which has a one ore more Deliverable. 5

6 AGENDA ENTERPRISE PERFORMANCE MANAGEMENT RECAP INDUSTRIAL PLANNING AND CONSOLIDATION MODELS CASE STUDY 6

7 INDUSTRIAL PLANNING & CONSOLIDATION MODELS CASE STUDY A global Group, leader in the Resources Industry, with main business focus on Energy and mainly based in Italy but with operations in more than 20 Countries in Europe, North America and Latin America. # of Countries >20 Employees >3.000 # of Legal Entity > 500 # of Plants > 900 7

8 INDUSTRIAL PLANNING & CONSOLIDATION MODELS CASE STUDY Planning & Reporting under pressure: Key challenges in the Group processes. Integrate Client P&R model with Corporate reporting Platform Planning Processes not integrated and not efficient (duplication, timeframe too long, ) Several existing solutions in the Group with different tools and application New Planning and Consolidation Model and tool Controlling dimensions, rules and standards different by Country Corporate tools HQ centered for a world wide Group Complexity due to high Legal Entities number (~500) and Plants number (>900) 8

9 INDUSTRIAL PLANNING & CONSOLIDATION MODELS CASE STUDY Planning & Reporting Processes re-design: main Project Milestones. Main Countries Planning models Deep Diving and Benchmark Group Control Model Review Key Results Unique Common Planning Baseline within Group Operating Control Process Assessment Local Planning Process Assessment Unique Planning Process in > 20 Countries Unique Consolidation Model Group Planning Tool at Country Level (Central Staff and Line functions directly involved) Group Planning and Consolidation Tool at Country Level (Data Collection from Local P&C) Group Planning and Consolidation Tool at Plant Level (~ 800 Plants) New Controlling Model in the Group Planning and Consolidation Tool Group Controlling Model fully recognized by Countries ad available in all Information Systems. Year 1 Year 2 Today Assessments Planning Tools implementations 9

10 INDUSTRIAL PLANNING & CONSOLIDATION MODELS CASE STUDY A relevant change in Planning and Consolidation Processes for more than 500 Legal Entities in 20 Countries Unique Planning Process supporting Group requirements Maximum responsibility of Countries and Legal Entities Significant collaboration / interaction between central and local P&C departments. Total Integration with Corporate processes 1 process 1 calendar 1 data entry 1 original data Operation and Development Plan fast Simulations on collected Data 10

11 INDUSTRIAL PLANNING MODELS CASE STUDY Project Approach and main activities: deliverables and timing. m1 m2 m3 m4 m5 m6 m7 m8 m9 Local Models general analysis Local Models Benchmark Model Closing and Workshop Test / Training Planning and Reporting Tool Implementation Go Live Meetings with Countries in order to understand local planning processes and consolidation models. Local Planning Models Analysis in order to choose best practices and adopt Unique Models for the Group. Sharing with Countries of the Unique Planning and Consolidation Models both for Profit & Loss and Balance Sheet. Application Test with European Users; Application Training with all Country Users. System Available to Users both for Planning Activities and to feed automatically the Central Planning Consolidation Tool. 11

12 CASE STUDY: UNIQUE PLANNING MODEL KEY FACTS General Model Profit & Loss Model Balance Sheet Model The dimensions of the Planning and Reporting Tool has been set in order to feed the Central Planning and Consolidation Model and satisfy the reporting needs of the Client; The model of the Software Tool has been centrally designed keeping in in consideration Countries requirements and standardizing them in a Unique model. P&L Slim designed starting from the Central Planning and Consolidation structure and choosing Planning Accounts; P&L can be calculated according to the designed Planning Models and can be adjusted using manual input. Balance Sheet hierarchy is created starting from the Central Planning and Consolidation tool; BS will be automatically moved and balanced according P&L and Capex for all the Legal Entities; Manual input (e.g. Debt) only on main Legal Entities. 12

13 CASE STUDY: UNIQUE PLANNING MODEL KEY FACTS General Model Unique common Chart of Account Planning at Plant / Legal Entity Level Common calculation models for each Chart of Account section (i.e. Revenues: P*Q + Input) Common Data Entry and Reporting set Countries Planning Activities will follow a Unique Planning model suitable for the whole Group 13

14 CASE STUDY: CONTROL MODEL OVERVIEW Controlling Model is based on several Dimensions, each of one has a clear link to the Business. Technology Plan Period Scenario Year Value Chain Jan Plan Hydro Wind GN Plant Maint. GN Plant Dev. Support Feb Dec Mbdg Fore Act KPI 2012 BS 2013 Quantities Prices Operation Execution Eur BD Plant APE Local Entity Thirds US App Ver. Wrk. Ver. 2 P&L Wrk. Ver. 1 Account Version CHI IT Value Entity Country Flows Intercompany 14

15 CASE STUDY: PROFIT & LOSS KEY FACTS Model Based on: Accounts Chosen Production; Market Sales; Energy Purch; # Green Cert.; Prices. 8 Calculated; Input. Energy Purch; Production; Energy Sold; Unit Costs. 3 Calculated; Input. P&L Slim Highlights: Total base account number: ~150 Each section can be calculated using Planning Model, can be a direct input or can be a p*q + input; Input account can be precalculated applying CPI to previous Actual or Forecast. FTE; FTE Cost; Maint. Unit cost; Production; Capacity. COD; Usef. Life. Debt; Tax Rate. Input. 2 Calculated; Input. 2 Input/ Calc. 4 Input/ Calculated. Input/ Calc. Input 15

16 CASE STUDY: ENERGY REVENUES PLANNING MODEL Energy Revenues Calculation Model is a clear Example of Driver Based Budgeting Market Price ( /MWh) Market Sales (MWh) Group Sales (MWh) Group Price ( /MWh) Market Revenues Group Revenues Net Electricity Production (MWh) PPA Sales (MWh) Energy Sold (MWh) PPA Revenues Energy Purchased to be sold (MWh) PPA Price ( /MWh) Legenda Input Calculated Economics Feed in Price ( /MWh) Feed In Revenues 16

17 CASE STUDY: OPERATING COST PLANNING MODEL Planned Maintenance Unit Cost ( /MWh) Planned Maintenance Net Electricity Production (MWh) or Previous Year Value * CPI Effect Unplanned Maintenance Unit Cost ( /MW) Serv. main. rep. Wor. and T part. Fa. Im Unplanned Maintenance Legenda Net Generation Capacity (MW) Direct Input on selected Accounts or Previous Year Value * CPI Effect Operating Costs Calculation Model is a mix of Driver Based Budgeting and Inflation (CPI) Based Budgeting Input Calculated Economics 17

18 CASE STUDY: KEY FACTS FOR BALANCE SHEET Model Based on: Tangible Asset: Total Capex, Impairment, Amortization; Intangible Asset: Impairment, Amortization; Net Financial Asset: Impairment. Balance Sheet Highlights: Selected only base account used for Actual: ~90 Each section is calculated at Legal Entity Level and can be adjusted using input accounts. Surplus is automatically posted on a Cash account: BS is automatically balanced; Manual input (i.e. Debt) can be a direct input only on main Legal Entities. Net Trade Receivables: - Increase: Core Costs + Opex (no Pers., Tax) + Capex; - Decreases: according to Payment Days. Trade Payables: - Increase: Core Revenues, Ricavi No Energy e Altri Ricavi; - Decreases: according to Payment Days, input for Capex Payables. Provisions: Provision Expenses and Deferred Tax Expenses and Income from P&L. Direct Input; Short Term financial payables - Third automatically increased/decreased with Balance Sheet SURPLUS; Impact on Medium Long / Short Group / Third Financial Income and Charges according to 4 Interest Rates by Country. Direct Input. Direct Input / Calculated from P&L. BS balanced on Cash Account. 18

19 CASE STUDY: BALANCE SHEET PLANNING Net Tangible Asset APE - Opening Balance + Opening Balance is automatically calculated starting from previous period closing INV - Capital Expenditures + Calculated from Total Tangible Capex IMP - impairment - Calculated from P&L - Impairment of tangible assets AMM - Depreciation - Calculated form P&L: Depreciation of tangible assets other flows Other significant flows can be filled as input Legenda Direct Input CHI - Closing Balance = Sum of the Flows Balance Sheet Model is a clear Example of Driver Based Budgeting Automatically Calculated 19