1a-Cpyright Year Budget Planning and Frecasting (OS1) Fllwed by: 2-PM Pre-Assignment (PM2) Why: The Operatins Department is keeper f the checkbk. Operatins Specialists set budgets at several pints thrughut the year fr the fiscal and cpyright years in accrdance with input frm the Business Managers. The Operatins Specialist is then respnsible fr mnitring, updating, and re-frecasting these numbers n a calendar basis, as determined by PHHE. The Operatins Specialist creates budgets using several tls and prcesses, depending n the stage f the prduct and the time f year. An Operatins Specialist creates purchase rders and passes invices fr all wrk related t plant and editin csts, unless specifically listed in the fllwing prcedures. Wh: Operatins Specialists; Acquisitins Editr Skills Needed: Financial analysis skills; general prductin knwledge Knwledge Base Needed: PIMS, CES, Micrsft Excel TASK: Initial Business Plan 1 Budgeting The Operatins Team is respnsible fr establishing the first budget prpsal Business Plan 1 (BP1) due t CEO (Will Etheridge) by Octber 1. This prcess shuld start by June 1,, r sner, if all Blue Frms have been apprved by the President and Business Manager. Step 1: On June 1, Senir OS shuld send an e-mail t their team Acquisitins Editrs (AE) infrming them that the yearly budget prcess is beginning. The e-mail shuld include milestnes: Meeting schedules Family Budget frm r accepted cheat sheet cmpletin date Final PPS input date and thers as determined by Directr f Operatins and Business Manager in the budgeting prcess. The latest budget and instructins n hw t use the Family Budget frm r cheat sheet created/maintained by the Operatins Specialist (OS) shuld als be included. NOTE: The Family Budget frm is nt required but is a tl that OS shuld encurage AE t use when budgeting A thrugh AAA titles. This frm allws AE t cmmunicate specs and csts fr wrk cmmissined by AE that d nt flw frm PPS t PIMS. The use f this tl can greatly reduce the amunt f time spent at the Budget Review meeting. Step 2: OS pulls PIMS recrds fr cpyright year and cmpares t PPS Prject Summary Reprt (PSR) fr each discipline fr which they are respnsible. Step 3: Once cmpared, and when the Family Budget frms have been received frm Editrial, the list is reviewed with the Senir Managing Editr (SME) and their Editr in Chief (EIC), AE, and Supplement Editrs (SE) fr accuracy f specs and planned plant spending. Fr titles with media prduct, the Media Prject Managers (MPM) must be invlved in meetings. Updated: 12/21/07 Page 1 f 7
Step 4: OS prepares a preliminary plant budget based n the infrmatin prvided, including print and media supplements, and enters the budget ttals int PIMS BUDGET >Overview >BP1. These initial budgets becme Business Plan 1 (BP1). Budgets fr media supplements are created based n the budgets prvided t the OS by the Media Prject Manager (MPM). Individual budgets fr printed prducts are created in ne f tw ways: 1. By mdeling, when an average plant cst per page fr a segment f wrk can be determined. OS multiplies that average cst per page by the page cunt supplied by AE. OS adds t the ttal any additinal csts that were nt part f the mdel. This methd is primarily fr B and C level titles. When pssible, average cst per page shuld be brken dwn int the 11 buckets *. 2. Line item budgets where budgets are created at the General Ledger (GL) cde level at a minimum f the 11 buckets*. If there is time r the title warrants it, the buckets can be brken dwn int further detail. This methd is primarily fr A, AA and AAA titles. Sales Categries f Bks >= $1,000,000 = AAA $500,000 - $999,999 = AA $250,000 - $499,999 = A $100,000 - $249,999 = B < $100,000 = C Updated: 12/21/07 Page 2 f 7
NOTE: *The 11 buckets are grups f similar GL cdes that are rlled int ne bucket. The 11 buckets are: Art Permissins Cmp Prep, Design Prductin Develpment Prfs Management Research Misc. If the prduct, (such as a print r media supplement) d nt warrant all 11 buckets, nly thse needed shuld be created. Step 4: OS gives the cumulative cpyright year (c/r) plant spending t Directr f Operatins fr review, then, passes it t Business Manager by August 30 (2.5 mnths frm start). Step 5: Business Manager prvides feedback, and OS wrks with AE and/r Editr in Chief (EIC) and In-huse Prject Manager (PM)/Liaisn t make necessary revisins t meet divisinal plant spending gals. Step 6: OS must cmplete the review and revisin f the plant budgets fr BP1 n later than September 15 (3.5 mnths frm start) Updated: 12/21/07 Page 3 f 7
TASK: Business Plan 1 Revised Budget Business Plan 1 Revised (BP1 (Rev)) budget is the adjusted budget after the PE president sets divisinal gals. Step 1: The budgeting f plant cst spending fr the upcming cpyright year is an nging prcess, and budgets must be revised as new infrmatin is btained and titles are launched. OS must cmplete an verall review f the BP1 budget and year-t-date spending by March 1 f the fllwing year (9 mnths frm start) t ensure that the budget is still in line with divisinal gals. After discussing the budget with the Business Manager, AE, and SME, the OS enters the apprved BP1 (Rev) ttals int PIMS BUDGET> Overview> BP1 (Rev). This becmes the Frzen Budget fr the cpyright year. If during the curse f prductin mney needs t be mved frm ne title t anther, the BPRev can change t reflect this IF the RTP budget has nt been dne. Remember t change ALL titles affected by the budget shift. Step 2: After March, OS reviews the c/r spending mnthly and reprts quarterly t Directr f Operatins. (See plicy n Mnitring Plant Budgets using the Dashbard) This review will include initial Release t Prductin (RTP) cst estimates and Cnfirming Cst Estimate (CCE)/ Presswrk and Binding (P&B) budget csts, when applicable. Step 3: Directr f Operatins mnitrs c/r spend and generates reprts fr the00 Directr f Prductin fr PHHE and grup Business Managers. TASK: Preplanning Plan Spend (Blue Frm) T aid editrial with planning plant spending befre mst wrk begins n a prject. Updated: 12/21/07 Page 4 f 7
Step 1: In February (8 mnths frm start) OS reviews and revises (if necessary) the Budget Wrksheet (aka Cheat Sheet r Family Budget Frm) that is t be used by AEs in the creatin f their Blue Frms. Step 2: OS participates in mnthly List Review meetings called by In-huse (PM)/Liaisn and attended by AE, Media Editr, and EIC (ptinal) as well as SME, Art Directr (AD), Media Prject Manager (MPM), t discuss future titles, verall status f the list, specificatins, and plant spending prir t submissin f Blue Frms t senir management fr apprval. Step 3: As Blue Frms are being prepared fr AAA and AA titles, the EIC and AE shuld meet with OS and the SME t review all budgets within the prduct family prir t the Blue Frm being submitted fr apprval. Step 4: OS must keep a recrd f the budget that was created at this stage fr future reference and use it fr planning the fiscal year and cpyright year budgets. Maintaining recrds f what was planned vs. what was actually launched/prduced is als helpful in identifying budget discrepancies. The OS can use the Create/Mdify Budget feature f PIMS t recrd this preliminary line-item budget fr histrical reference. The Latest Estimate feature will allw the In-huse PM/Liaisn t update the budget and capture the latest budget inf. Suggested line-item budget labels are as fllws: PPS Budget PPS Budget Revised BP1 Budget BP1 (Rev) Budget Launch (RTP) Estimate Launch (RTP) Estimate Launch (RTP) Revised CCE (P&B) TASK: Prjectin f Fiscal Year Spend A key element f the budget management prcess includes prjecting spending in the fiscal year (Jan-Dec) while applying it t the current cpyright year (Sep-Aug). Predicted spending in the fiscal year must include carryver spending frm past cpyright prducts well as current and anticipated spending fr future cpyright prduct within a fiscal year Step 1: Each OS shuld determine the histrical average f all cpyright year spending relative t fiscal year spending. (e.g., Team 14 has histrically spent 85% f its fiscal year budget n the upcming cpyright year. Thus, fiscal 2007 spending cnsists f 85% f the cpyright 2008 budget.) This infrmatin can be btained frm the reprts issued by Rn Chapman. If the cpyright year budget is n target, barring any unusual manuscript turnver trends frm editrial, the fiscal year budget shuld als be n target. SME and OS shuld discuss any anmalies in vlume f manuscript turnver (mre r less than average), r any anmalies in the timing f manuscript turnver (earlier r later than anticipated). Either f these trends culd affect the plant spending fr the fiscal year. Updated: 12/21/07 Page 5 f 7
The OS als needs t determine hw much carryver spending frm previus cpyright years will ccur in the current fiscal year as well as hw much spending will ccur in the current fiscal year fr future cpyrights. Tls t determine plant spending include: Mnitr Plant Budget Using the PHHE Budget Dashbard: OS must be able t prvide infrmatin t AE/EIC and Business Managers as t status f plant spending vs. the budget n demand and n a mnthly basis during the last half f each calendar year in rder t enact a strategy t keep actual spending fr the year within budget. The Dashbard can be reached by: http://phheprductin.pearsned.cm/ -> Plant Dashbard Step 2: Each mnth, when the previus mnth s expenses have been psted t the dashbard (usually arund the 12th t the 15th f the mnth), the OS will review these numbers and cmpile a summary reprt t be distributed via e-mail t the EIC, SME, Business Manager, Grup President, Directr and Assciate Directr f Operatins. This summary shuld include: Ttal year-t-date expenses vs. final, frzen budget usually BP1 Rev (frm dashbard) Percentage f budget left t spend fr the year vs. percentage f year remaining (frm dashbard) Other pertinent infrmatin as applicable, (t be cmpiled frm PIMS and dashbard), fr example: Percentage f prjects cmpleted/in-stck vs. percentage f budget spent year-t-date In the last half f year, number f titles and assciated csts nt yet in prductin that will likely be mved t next cpyright year Discipline tracking; (e.g., if ne specific discipline is tracking t be ver budget r grssly under budget; if ne discipline has all manuscripts in prductin, r all titles cmplete with a substantial amunt f the year and budget left; etc.) Anything else that wuld help t explain r substantiate the yeart-date spending and budget Updated: 12/21/07 Page 6 f 7
Step 3: If the dashbard indicates the team will be ver budget by any amunt r under by mre than 5%, detailed analysis is required. It is essential t hld a team meeting with the EIC, SME, Business Manager, Directr and Assciate Directr f Operatins as early in the year as pssible if prjectins indicate a team will exceed its budget. Prducts may have t be deferred t the next year, specs changed/dwngraded, supplements cancelled, n additinal titles accepted int prductin, r additinal funds may be apprved by the President and Business Manager in rder t effectively manage the spending. NOTE: The WIP clumn in the Dashbard ttals all spend during current and previus calendar year. If spend has ccurred mre than 1 year prir t prductin, OS needs t refer t the WIP system fr mre infrmatin. TASK: Prject Plant Csts frm PIMS Step 1: All budget numbers in PIMS must be accurate t prvide real time financial infrmatin t the EIC and Business Manager. Each team s OS (in agreement with his r her Directr and in relatin t his r her actual plant spending vs. the budget) shuld review mnthly budget reprts fr at least the last half f the fiscal year, generated frm PIMS. This reprt, generated by Warren Ramezzana, shuld include title-by-title analysis f prjected plant expenses as well as the PPS budget, BP1 and BP1 (Rev) budgets, Launch (RTP) Estimate, Revised Launch (RTP) Estimate, CCE (P&B) Estimate, Cmmitted csts, and WIP csts. The OS can then subtract the WIP cst frm the current/latest budget estimate t determine the balance f plant left t spend. The OS shuld add up clumns f current/latest budget estimate and balance f plant left t be spent by discipline, and then rll up the verall disciplines by team t an verall number. This mnitring assures that plant spending is under cntrl fr the year. (See: Prjected Plant frm PIMS reprt). Step 2: At the start f the Furth Quarter (Q4), the OS must cmplete this prcess and discuss it with the Directr and Assciate Directr f Operatins t prperly manage the plant spend thrugh end f the year. Payment f sme invices may have t be deferred if a team is prjected t be slightly ver budget, r cnversely, sme invice payments may have t be accelerated if the team is prjected t be under budget, s n plant dllars are left n the table, and thus deleted fr the next year. Step 3: At the end f the year, the OS shuld als cmpile the PPS budget and BP1 budget clumns and track them against the CCE estimate t ascertain hw clsely the OS BP1 budgets match actual spending prjectins. Updated: 12/21/07 Page 7 f 7