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Competence Framework - 4 of 29

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COMPETENCE 4: FINANCIAL MANAGEMENT

The ability to enable financial resource for delivery and to plan and control the finances of change initiatives, as part of the organisation’s overall financial management, to ensure optimisation of the business case.

Introduction

Financial management considers the affordability of the proposal within the timeframe, and ensures that the money required is secured and made available when needed, and is subsequently managed. It provides an interface between the financial management arrangements for a change initiative and the financial systems of the organisation.

❶

KNOWLEDGE

Knowledge of the governance rules for investment.

 

APPLICATION

Adopt a consistent approach to the investment appraisal of a change initiative in line with organisational practice.

Consider:

  • The financial governance that exists within the organisation, including the financial reporting system to be adhered to.
  • The reporting procedures that are in place for a change initiative.

 ❷

KNOWLEDGE

Knowledge of the characteristics of a consistent approach to estimating.

 

APPLICATION

Ensure a consistent approach to estimating is used across a change initiative.

Consider:

  • The elements that require estimation.
  • The different types of costs (labour, non-labour, and ongoing costs to the organisation) and their timings.
  • Ways to identify optimism bias in estimating costs.
  • The available sources that can be used to validate estimates and the need for ongoing refinement.

❸

KNOWLEDGE

Knowledge of the value a change initiative will give to the organisation.

 

APPLICATION

Determine capital and revenue expenditure for a change initiative, ensuring alignment with the organisation’s financial plan.

Consider:

  • The difference between capital and revenue expenditure.
  • The link between the financial value of a change initiative and the strategic objectives.

❹

KNOWLEDGE

Knowledge of the reporting procedures for reviews.

 

APPLICATION

Establish financial reporting milestones and reviews for a change initiative.

Consider:

  • The types of financial reports.
  • The timing of funding release.
  • The commercial milestones that are in place for all parties.

❺

KNOWLEDGE

Knowledge of the organisational procedures for the release of funds.

 

APPLICATION

Establish control limits for the reporting and approval of budget variances, and arrangements for the release of funds at appropriate stages in a change initiative.

Consider:

  • The levels of financial accountability.
  • The validity of the revised forecast.
  • Agreed tolerance levels.
  • Contingency options available.
  • The importance of rigour in communicating fiscal responsibilities.

❻

KNOWLEDGE

Knowledge of the financial reporting system in place.

 

APPLICATION

Produce financial progress reports based on the financial information related to a change initiative. Adjust a financial plan based on the progress of a change initiative and associated financial reviews.

Consider:

  • The tools/techniques available to monitor and report.
  • The actual cost versus forecasted cost.
  • The categorisation of costs, including internal versus external resources.
  • The implications for forward planning and potential impact on a change initiative.