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Forecast, budget and 5-year plan governance and control

Following the implementation of the Finance Organisational Transformation Programme across Engineering Finance and the efficiencies and optimisations it delivered, there was a growing need to further operationalise the processes.

This involved embedding best practice project management office disciplines, governance, controls, and reporting into the bottom up forecast (8+4), budgeting and 5-Year planning (5YP) cycles and their associated processes within Engineering.

Challenge

The embedding of best practice project management office disciplines, governance and controls met various challenges:

Starting point – Prioritisation (affordability vs demand)

It should be noted that the 8+4 forecast, budget and 5YP process was based on H1 Prioritisation work which had identified a ‘gap’ between affordability and demand

This gap was the source of much initial debate and discussion around ways to mitigate, providing uneasy foundations for a more structured way of working

Governance and Process Discipline

The introduction of disciplined governance and control across the 8+4 forecast, Budget & 5YP process was a new concept and understandably saw instances where shortfalls in process adherence were experienced

There were examples of milestone dates being missed or somewhat disregarded, which put pressure on production, submission and review timescales

Absence of a structured plan

The 8+4 forecast process commenced without any end-to-end plan detailing the required inputs, the process for production and the review requirements

A plan was drafted to ‘capture and catch up’ with the start of the process, subsequently being iterated multiple times to cover all requirements before being baselined via mobilisation of a governance rhythm

Unstructured discussion within governance meetings

Discussion often moved away from deliverables and timescales onto various unplanned sub-topics with no clear output

Given the low level of governance maturity, there was a need to employ a flexible ‘test and learn’ approach, with a level of ‘forming/storming’ to be expected

Lack of templates and deviation away from agreed submission formats

There were instances where submissions were reviewed using different formats, deviating away from the agreed templates

Decision-Making Authority Among Multiple Stakeholders

Despite the right stakeholders being on the governance meetings, there was a lack of clarity or mechanism for ultimate decision making (between a small, fixed group of people) at critical stages

Responsibility for elements of the process (e.g. approving assumptions, process and deliverables) was open to interpretation and clear decision making was challenging among multiple stakeholders

Artefacts & Actions: Engagement, Completion & Communication

Despite circulating an action log weekly, no confirmation was received as to their completion (this required extensive chasing to ‘close the loop’

Approach

The overarching approach centred around the following key activities:

Determining and documenting all inputs required into the Engineering 5-year financial plan, across the divisions

Documenting the key input delivery milestones and associated review sessions in order to hit the 5YP submission

Documenting, publishing, coordinating and tracking the plan to ensure 5-year plan submission

Liaising closely with the owners of the portfolio prioritisation work to ensure the 5-year planning incorporates this activity

Chair meetings to gather all 5YP inputs required

Responsibility for ensuring every participant of the 5YP is fully aware of the asks of them

In order to achieve this, a day-to-day working milestone delivery plan was constructed, detailing key inputs, production and review requirements for the 8+4 ‘bottom up’ forecast, budget and 5-year plan.

A governance proposal was subsequently agreed and mobilised, with documented Terms of Reference for a twice weekly governance meeting with key stakeholders across Engineering Finance, Engineering Ops Management and Divisional Finance Leads.

To support the mobilisation of structured governance, additional supporting artefacts were constructed, including a weekly status report, action log, risk and issues register.

Outcome

A number of key outcomes were realised:

Clarity & Coordination – Defined inputs, owners, milestones, and review sessions for Engineering’s 5YP and cycles.

Governance & Accountability – Established a robust reporting framework with weekly status updates to track progress, surface risks, and keep transparency.

Engagement & Ownership – Facilitated cross-functional collaboration and ensured contributors clearly understood their roles.

The set up a mobilisation of governance for the forecast, budget, 5YP process for Engineering Finance was a positive step forward and added structure along with an important forum (and associated artefacts) for stakeholders to work through critical inputs, assumptions and make progress.

It’s important to keep perspective that this was the first time there had been a plan of any kind to work from. It was to be expected that maturity, discipline and engagement would be starting from a low level.

Likewise, it could also be expected multiple stakeholders in a new governance forum would attract debate and discussion, with conflicting priorities. A repeatable plan and associated artefacts should enable future cycles to be managed closely from the outset and ensure alignment with Group FP&A requirements. The plan mobilised for Engineering Finance could and should be extended to other areas of Group Finance & Performance Management to drive a integrated plan across all areas.

Project One value Add:

Structured 5-Year Planning – Defined and documented required inputs across Engineering, mapped milestones and review sessions, and coordinated the full planning cycle to ensure timely submissions.