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.
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.
Knowledge of the governance rules for investment.
Adopt a consistent approach to the investment appraisal of a change initiative in line with organisational practice.
- 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.
Knowledge of the characteristics of a consistent approach to estimating.
Ensure a consistent approach to estimating is used across a change initiative.
- 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.
Knowledge of the value a change initiative will give to the organisation.
Determine capital and revenue expenditure for a change initiative, ensuring alignment with the organisation’s financial plan.
- The difference between capital and revenue expenditure.
- The link between the financial value of a change initiative and the strategic objectives.
Knowledge of the reporting procedures for reviews.
Establish financial reporting milestones and reviews for a change initiative.
- The types of financial reports.
- The timing of funding release.
- The commercial milestones that are in place for all parties.
Knowledge of the organisational procedures for the release of funds.
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.
- 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.