Hyperion Planning - Requirements Document Preparation - 1

Namaste!

welcome back to "Hyperion Planning - Requirements" blog series.
In earlier blog, we have discussed the questions to be asked during requirements workshop.

https://padmaja-vemireddy.blogspot.com/2020/02/hyperion-planning-requirements-workshop.html

After the requirements workshop has been conducted, all the responses for "requirements questionnaire" from the stake holders has to be collected, analyzed and prepare the "Business Requirements Document (BRD)" or "Functional Specification Document (FSD)".

Today, we will discuss how a typical BRD or FSD looks like.

It all starts with outlining the current budget system/processes in place with client.

Imagine we are preparing this document for a hydro electric company's budgeting requirements.
 
Here is a sample write-up on overview and current state.,

Overview:

The Functional Requirements Document captures the requirements of Client with regard to their Budget and Forecast process. The current budget cycle is manual-intensive incorporating spreadsheet distributions to maintain budget and forecast data. The process is time consuming, person-dependent and prone to inconsistencies.

As-Is Process/Current State of budgeting and reporting processes:

• The budgeting of revenue from the customers is based on usage and other factors.
• General and Administrative expense budgets are provided by the Budget Analysts from various functions/departments.
• The sites provide the budgets for the Operations and Maintenance Expenditure. All other expenses are budgeted based on the prior year actuals.
• Labor costs are calculated on separate spreadsheets using headcount and work hour data.
• All other expenditure items are input, based on prior year actual figures.
• The Trial Balance Budget is prepared followed by the Income Statement in order to provide the Net Income Budget.
• Balance Sheet budget is prepared using opening balances from the previous period. Additions and deductions are provided from relevant income statement budget items or recalculated every period depending on the budget item.
• Cash Flow Statement is prepared using outcomes from the Net Income and movement in current assets and liabilities.
• Forecasting is based upon the current budget.
• Variances are spread across the remaining current budget period dependent of Expenditure Type.
• Actuals are obtained from the Oracle EBS GL system and compared to budget items to arrive at variances.
• Reporting is done on budgeted financial statements, site expenses, labor and overall variances.
• Reporting is handled at the department level and then combined through spreadsheets for overall level reporting. 

After explaining the current state of the budgeting system/processes, the next step would be documenting the functional requirements. Please note that, this section would be combination of the current processes as well as the future or new requirements.

It would be very important to review the functional requirements with the client, time-to-time. Upon receiving the feedback from stake holders, any gaps in understanding the requirements could be patched up!

I would put the high level requirements into following broad categories:

• Revenue Budget Modelling
• Expense Budget Modelling
• Capex Budget Modelling
• Manpower Budget Modelling
• Report Templates/Definitions
• Workflow requirements
• Security Matrix

Revenue Modelling Requirements:

The revenue budgeting process involves arriving at the rates for various customers, taking into account the different calculations and adjustments involved.

Each Customer Type is associated with a different rate structure. The rate structures are derived by making calculations and adjustments as per statute and contractual obligations. The rates are then multiplied by the usage to arrive at the revenue budget figures.



Requirement -1:
Sales

Description:    

• The term, Sales, defines the usage amount hydro power sold to members.
  Provision for entry of usage by Customer Type
• The usage figures are entered for each customer type, month and year.
• Household rates
• Industrial rate

Requirement -2:
Miscellaneous Income

Description:

• Income generated apart from selling hydro power
• Provision for input of the various types of Miscellaneous Income
• All types of miscellaneous income.,Interest Income, Rental Property (For Month, Year, Account)

Expense Modelling Requirements:

The Expense Budget is a combination of the G&A (General and Administrative) budgets, O&M (Operations and Maintenance) budgets and Other Expenditure budgets.

These are primarily straight figures based on previous year Actuals. However, in case of G&A expenditure, the gross budget amounts entered by the Budget Analyst are split between the Departments.

Requirement -3:
General and Administration Expenditure

Description:

General and Administration (G&A) Expenditures are overhead rates which are incurred by the functions or departments. The Budget Analyst would enter a gross amount as the budget for his/her responsibility organization for G&A expenditure.

• Provision for distributing the gross amount to various departments based on predetermined percentages using a  general/common account for the gross amount.
• Provision for input of amounts to G&A accounts directly if no distribution is required. 
• Provision for allocation to Sites.
• Provision for input of the gross amount at Site/Location level. 

   
Calculations:

• The ratio is to be applied to the gross amount and charged to the relevant G&A accounts by organization. 
• The general/common account is split based on the Departments.

   

Requirement -4:
Operations and Maintenance Expenditure

Description:

Operations and Maintenance (O&M) Expenditures are overhead rates incurred at the Sites for Operations and Maintenance.

• Provision for input of the O&M Expenditure at Plan) / Location level 
• Provision for allocation to Sites

Requirement -5:
Other Expenditure

Description:

Other Expenditures are overhead rates incurred at the Corporate level:

• Property Tax
• Total Interest
• Depreciation
• Provincial Tax
• Federal Tax
• All other non-operating expenditures marked as overhead expenses

• Provision for input of the Other Expenditures at Corporate level 
• Provision to enter the supporting detail 
• Provision for allocation to Sites

 
Requirement -6:
Labor Costs - Expense

Description:

Labor Costs are tracked at the Organization level. The rates for each employee are maintained in Oracle HRMS.

The following are the rates associated to Labor Costs (each salary plan/department combo has different rates):
           

• Standard Rate: The rate employees are paid
• Increase Rate:  The rate the standard pay is increases periodically based on planned             merit increases
•  Overtime Rate: The rate overtime pay is calculated
• Burden Rate:    The overhead rate added to the pay (includes healthcare, pension, etc)

Note: Standard and Overtime costs have different Burden Rates.

Once Labor Costs are calculated, they are allocated to different COA accounts and departments

• Provision to distribute Labor Costs to expense accounts as per COA.
• This is to be done by entering all the Labor Costs to a common labor project & common labor task and distributing it based on per-determined percentages to various COA accounts 
• Provision for allocation to Sites

Calculations:

• Standard Labor Cost is a product of Standard Rate and Hours
• Overtime Labor Cost is a product of Overtime Rate and Hours
• Burden Rate is applied on the total cost – separately for Standard and Overtime
• Percentages are applied for allocation of the total costs

   

Requirement -7:
Labor Costs - Capital

Description:

Labor Costs incurred in Capital Projects are capitalized.
The portion which is to be capitalized goes into a capital account.
The Labor Costs which are not capitalized are split between different COA accounts based on              predetermined percentages.
Capital costs are incurred only by IT and Sites

• Provision to enter the budget for capitalized labor by Project
• Provision to extract the labor cost to be capitalized from the total Capital Budget
• Provision to maintain the Capital Budget in Hyperion
• Provision for allocation to Sites

In next blog, we will discuss the following requirements

• Balance Sheet requirements
• Cash Flow Statement requirements

Happy Learning!

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