Management Approaches to Resource Allocation

• Previous page
• Table of contents
• Complete text
• Next page

5. Impact on Corporate/Departmental Processes

The following section highlights how some of the corporate/departmental processes were impacted as a result of implementing a formal departmental planning process.

Key Findings:

• Almost every organization experienced process, structural and behavioral changes as a result of implementing a formal planning process;
• Those organizations who have implemented a formal planning process have experienced a more informed decision making process;
• Most new investment planning processes have been more horizontally integrated and significantly more transparent throughout their organizations;
• Respondents indicated that formal planning has allowed them to plan for and smooth out spikes and valleys and has increased Deputy Head/Senior VP awareness/visibility on investment decisions and where their capital dollars are being spent;
• There appears to be a common approach to ensuring that those making the investment decisions are provided with accurate data, relevant priorities, corporate context and risk so that sound financial decisions can be made that are aligned with corporate strategic objectives.
• Organizations with formal planning processes have also created internal processes and committees and some have had to assign staff to manage the planning process.

5.1. Process

Under fixed program budgets, often specific areas had significant spending requirements that exceeded their budget allocation. Managing at a departmental level allows departments to manage those spending spikes more effectively. Reallocation becomes strategic and not opportunistic. Many organizations responded that their Deputy Heads/Presidents received a full picture of their capital expenditures that are described in terms of priority and risk. Organization D’s representative described the process as “eye-opening”.

Many organizations reported that there was increased transparency in the formal planning process. Once the process was understood, branches could see what funding was provided to other branches. Prior to this, planning and decision-making was stove-piped, often lacking context from other initiatives within the department. Adopting a formal planning process has resulted in decisions being made by the program managers/decision makers at a strategic level, rather than by the implementers.

One organization experienced challenges in moving from a branch process to a department process.

Organization B’s representative claimed that the new investment planning process had resulted in strengthened governance in terms of oversight and engagement; Organization G reported stronger and more robust business cases; Organization H related that the formal planning process was “a very positive change” and improved decision-making “hugely—night and day.”

5.2. Structural

Some organizations have had to create new internal processes and committees and have had to assign staff to manage the planning process. As noted in section 4.2.3.1, a number of senior level and working level committees were created. Some respondents created new sections responsible for the planning and oversight mandate. For organizations whose budgets are in the billions, having a one-size-fits-all approach is not practical. As well, for organizations who rely on partners to deliver services, it is difficult to manage the investment decisions made by these partners.

Prior to the formal investment planning process in place at most of the organizations interviewed, the real property/asset management organizations tended to have the lead in the capital plan. The input was individual capital projects and the output was a capital plan which was submitted to the Finance/Corporate Services branches. Following the transition to a formal planning process, many organizations have moved the lead to the Finance/Corporate Services branches and have set up technical working groups across their organizations to provide input into the corporate plan.

5.3. Behavioral

Previously branches had roughly the same budget every year, but once the investment plan was developed, those departments did not have an annual capital budget but were funded in accordance with the approved items on the multi-year capital plan. Budget managers felt a “loss” because they no longer had control over their budget. However as people became accustomed with and involved in the process, they recognized that they are getting the funding their programs/projects require.

Organizations (D, E) reported some resistance to changes to the planning process and plan horizon, including doubts that estimates beyond five years would have any validity. These issues also appear to have subsided with familiarity.

• Previous page
• Table of contents
• Complete text
• Next page