How can program sponsors ensure financial transparency in a program portfolio?

While defining financial goals and metrics is essential, equally critical is communication and education about the financial metrics to the primary stakeholders. Not all stakeholders hold MBA’s or basic business finance literacy. If excellence in execution is desired, then enssuring stakeholders understand the math, logic and self-interest relevance of the inputs, outputs and business outcomes is a step that can’t be overlooked.

In ensuring financial transparency within a program portfolio, program managers should establish clear budgeting and reporting structures for each program, providing robust documentation and regular updates on expenditures, forecasts, and variances. It's crucial to adhere to financial policies, employing technology and tools to track expenses, and encouraging open communication about financial decisions to foster a transparent environment. Regular risk assessments, independent audits, and stakeholder engagement further support financial integrity while ongoing training and a commitment to continuous improvement refine processes, ensuring sustained transparency and accountability across the portfolio.

Financial objectives and metrics should cascade in a progressive breakdown from portfolio to program to tasking that eventually can be rolled up to provide overall investment value. That same type of structure can later be connected to your program management process to ensure that each program and its parts have clear objectives that contribute to achieving the overall financial objectives. That same structure can be used to collect costs related to successful completion of the program. Using this technique, you can have a clear picture that integrates portfolio and program benefits, costs, and associated activities. In the future, should any of these change, you'll be able to easily navigate the potential impact on your program.

Financial governance and reporting are essential to ensure that your portfolio performs as expected. At the core of governance are the basic principles of management control. It is critical that delegation of authority is clearly laid out and that finances are controlled and reported in a timely and efficient manner. Having a good controls framework for programs is key to being able ensure that there is fiscal responsibility and that the data is available for the appropriate program and portfolio-level analytics. A common framework for program reporting is also required. This is especially helpful when it is necessary to draw a "waterline" for funding ranked portfolio elements.

Significant thought must be put into configuring a financial management tool to ensure the correct balance of useability and usefulness. Often these tools are configured to a greater degree of detail than necessary, resulting in reduced adoption and a lower quality of data for analysis. The best tools will integrate your benefits realization plan, your program management, risk management, and your financial reporting. Pragmatic configuration will enable users to feed the system with data that is consistent and unambiguous. Analytics should support analysis at all levels and enable apples-to-apples comparisons across the portfolio.

Developing a calendar of events that drives portfolio planning, assessment, and communication should be coordinated across an organization to provide time for each stakeholder group to understand and contribute to the process in the appropriate order. Communication should be driven by a solid stakeholder management plan and associated communication plan developed by specialists.

Just like most planning processes, the ability to perform analysis at all levels is necessary. Top-down and bottom-up analyses must be enabled, allowing for an integrated view of the portfolio from the ground up. This ensures that all levels of analysis are using a common set of data. Despite everything, the process will not be perfect. Taking time to review the process as a whole is needed to improve it. Understand where the process failed, where programs struggled, and where both were successful. Every program should have an evaluation of lessons learned at key gates. The Portfolio team should actively engage with key stakeholders regularly to understand and resolve issues.