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R12.1.2 Project Forecasting

For those of you that are current Oracle Project Management users, you may be aware of some of the issues with Project Forecasting. Current business issues include:

  • Inability to plan a project’s forecast using fiscal calendar periods
  • Differences between actual and planned amounts automatically re-spread over the remaining periods based on the spread curve attached to the financial plan

To address these issues Project Forecasting functionality has been improved in R12.1.2; this blog describes the new forecasting functionality.

The new features include:

  • Ability to generate forecasts based on Fiscal Calendar
  • Generate plan periods based on the general ledger fiscal calendar
  • Ability to copy planned ETC from the latest baseline workplan and to optionally update the future period spread manually.
  • When using this new forecasting functionality, any differences between forecast and actual costs in the period are not automatically spread over the remaining future periods.

R12.1.2 Forecast Flow

  1. Define GL “Fiscal” Calendar
  2. Create Project Workplan
  3. Create Project Budget
  4. Generate Baseline Forecast
  5. Enter, collect & apply actual costs
  6. Generate New Forecast
  7. Manually adjust forecast amounts
  8. Submit for Approval

Configuration Requirements

  • It applies to financial plan types set up as forecast cost only
  • Time Phasing is enabled in the Plan Settings page
  • Task Level Selection enabled on the Edit Planning Options Page
  • Financial Plan or Work Plan Resource is selected as the ETC sources in the edit planning option
  • Change Document and Open Commitment are not to be enabled

The planning options must be set as:

Planning Options 1

Planning Options 2

Update Resource Assignment

Calculation Method

Review Spread Basis

The calculation method for the fiscal calendar spread is based on the following:

Number of Days in Fiscal Period / Number of Days in Resource Assignment Duration * Resource Cost

R12.1.2 Example

For this example I am not including any updates to the projects estimate to complete.

Define GL Fiscal Calendar

Define GL Fiscal Calendar

Create Project Workplan

Create Project Workplan

Review Spread Basis for Resources added to your plan

Review Spread Basis

Create and Baseline Project Budget and Forecast

Review the Period Profile for Task 1.1 Resource

Review Period Profile for Task 1.1

Review the Period Profile for Task 3.0 Resource

Review Period Profile for Task 3.0

Enter, Collect and Apply Costs

Enter and Collect Actual expenditures

Enter and Collect Actual Expenditures

Create a new forecast and collect actual costs incurred

Create new Forecast and Collect Actuals

Generate Forecast

The ETC values are added to the actual values to form the new forecast and profiled over the remaining periods of the project

Generate Forecast

NB: For Task 1.1 the Forecast is calculated as follows:

Current Budget is $20,625
less Mar, Apr & May Forecast period values ($1751.71, $1695.21 & $1751.71)
plus actual costs incurred in Mar, Apr & May, in this example $570.

Review the period profiles generated:

Review generated Period Profiles 1

Review generated Period Profiles 2

As you can see the forecast for the current period is replaced by the actual costs incurred. The future period profiles have not been updated with the variance between the actual and forecast costs for the current planning period (actual costs can replace forecasts for prior periods, current period or last closed period, in this example we are using the actual amounts through the current period).

Manually update any period forecasts

This allows project team members or project managers to assess if the generated forecast requires update. It may be that the variance in spend against forecast in the current or prior periods is due to genuine underspends or timing difference between the forecast and when the actual expenditure is incurred so no update is required.

In our example there is an underspend and so the forecast values have been reduced appropriately while maintaining the future period spreads based on the existing forecast values. If the Estimate to Complete had been updated then the forecast and period spread would be based on the new ETC values.

R12.1.2 Forecasting Functional Improvements

This article has shown that the new Forecasting functionality improves Financial Control by:

  • Aligning Project Planning with fiscal period results
  • Avoid Automatic forecast adjustments based on variations in prior periods
  • Improved cash flow forecasting

I look forward to hearing your views.

5 Aug, 2010 by

E-Business Suite

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