Budget to Actual variances outside a defined tolerance can be highlighted, requiring the owner to provide written justification

Description

This feature will present a department owner or other responsible party a list of accounts with the actual value, the budgeted value, and the variance. Variances outside of a specific tolerance will be highlighted and require input from the user.

Example Use Case

Scenario: Acme Corporation utilizes CPM software to manage and monitor annual budgets. The company wants to identify significant deviations between the budgeted figures and actual results to understand the reasons for the variances.

Solution: The CPM software has a feature that identifies and highlights variances outside of a pre-defined tolerance. For instance, if the actual production cost exceeds the budgeted amount by 10%, the system will immediately highlight this variance and a notification will be sent to the responsible party. The owner then provides a written explanation for the variance, assisting the company in understanding and managing deviations better.

Considerations

We've seen this handled best on a dedicated screen that shows all expenditures outside of tolerances. This approach saves the user from having to comb through hundreds of accounts and dimension combinations to find where there may be large variances and provides a valuable reason for users to login each month and interact with the system.

This functionality can appear on a sheet (input screen) view or in a more traditional report. Either way, the variances must be highlighted outside of a specific tolerance and allow the user to enter notes. Those tolerances should be configurable per account to be truly useful, but also applied in bulk to make maintenance easier.

As a reminder, we have requirements here about variances and tolerances. That is a basic function of a CPM tool. This requirement is specific to requiring explanation from the user before allowing them to save the form.

Questions to Ask a Vendor

• Tolerance Setting: How easily can one set custom tolerance levels in your system? Can this be done in a formula builder, or a pre-built wizard?
• Notification System: How efficient is the alert system in terms of notifying the responsible parties about the variances? Does it support automatic follow-up reminders?
• Required Notes: How does the system force the user to enter in variance notes? What can be entered or uploaded as an explanation?