Portfolio Management and the PPBE Process at the Department of Energy

April 2012

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Understanding the Department of Energy Budget Formulation and Execution

The Planning, Programming, Budgeting and Evaluation (PPBE) Process

What is PPBE?

• A process utilized for standardized budget formulation and execution within Department of Energy (DOE) and National Nuclear Security Administration (NNSA)

• First formalized at the Department of Defense (DOD) and is currently used by other Agencies at varying degrees of implementation.

Reality: HOW it will get done

• Fiscally CONSTRAINED

• Identifies emerging requirements

• Re-balance based on competing

requirements

Validation: Are we ON TRACK

•Administrator/Secretary Reviews

•OMB Reviews

•Technical Reviews

Vision: WHAT needs to get done

•Fiscally UNCONSTRAINED

•Defines high level scope

•Identifies Priorities

Justification & Distribution: WHY it needs to get done

• Finalize after OMB pass back and

prioritization

•Run budget scenarios

•Prepare Congressional Justification

The PPBE Process

PLANNING PROGRAMMING

EVALUATION BUDGETING

June 2010 GAO Findings within NNSA

NNSA (National Nuclear Security Administration) was mandated by the Government Accountability Office (GAO) to strengthen their program and project management capabilities within the Weapons Activities mission area.

• Cannot Accurately Identify the Total Costs to Operate and Maintain Weapons

Activities Facilities and Infrastructure, and These Costs Likely Significantly Exceed the Budget Justified to Congress

• NNSA Does Not Fully Identify or Estimate the Total Costs of the Products and Capabilities Supported through Stockpile Services R&D and Production Activities.

• Operations of Facilities and Stockpile Services Costs Are Unlikely to Be Significantly Affected by Reductions in Stockpile Size, and NNSA Lacks Cost Information to Help Justify Planned Budget Increases.

Budget Transparency before Portfolio Management

Mission

Strategic Themes

Goals Decisions were based on high-level goals and assumptions based on Program Manager knowledge without sufficient data to justify decisions

NNSA Weapons Activities Budget

NNSA and Portfolio Management

Two major initiatives were undertaken to streamline the PPBE process and account for total cost of mission product and capabilities.

– Developed a standard national work breakdown structure (WBS)

– Implemented a portfolio management system (OPPM) as part of an Enterprise Portfolio Analysis Toolset

OPPM and the NNSA PPBE Process

How OPPM supports PPBE

• Collects planning and program requirements data

• Summarizes work scope by mission, goals and priorities

• Provides workflows to facilitate management reviews of approvals of budgetary requests

• Supports analysis of dependencies and risk/return scenarios.

• Seamlessly integrates into various Enterprise systems

• Supports integration of project schedules for planning, dependency analysis, and health of investments

OPPM

PPBE

P6

OBIEE

Capabilities PPBE Requirements Addressed

Forms Collect budgetary scope information to be used for creating groupings of related activities, facilitating approval workflows, and decision support analysis.

Groupings/ Portfolios

Summarize identified activities by key mission, objectives, priorities, location of work, capabilities or any other budgetary data point collected.

Workflow Provide the ability for management approval at any requested level, maintain cyclical reviews and approvals of budgetary requests.

API’s/Web Services

Analyze dependencies and risk/return scenarios to make informed decisions on where funding should be applied Integrate into Enterprise accounting and other systems for business reporting

Analysis/ OBIEE Integration

Integrate seamlessly with project management software to what work can be performed in what timeframe for planning, dependency and heath of investment analysis

OPPM PPBE Capability Analysis

Budgetary Transparency with Portfolio Management

Decisions can be based on agreed upon low level detailed scope, requirements and priorities providing adequate justification to INCREASE budgetary funding.

Mission Portfolios

Theme Portfolios

Activities

WBS Portfolios

Goal Portfolios

•WBS •Work Scope •Funding Requirements •Risk •Priority •Dependencies •FTE counts •Capability and product alignments

The Power and Flexibility of Formulation Portfolios

Mission

Theme 1

Goal 1A Goal 1B

WBS 1B.1 WBS 1B.2

WBS 1B.1.1

Item

WBS 1B.1.2

WBS 1B.1.2.1

Item

WBS 1B.1.2.2

Item

Goal 1C

Item

Goal 1D

Theme 2

Goal 2A Goal 2B

Goal 2C

Item

One minute change to a detail at the lowest level of work scope will impact all parent portfolios up to the mission portfolio. Item

WBS 1B.1.2.1

WBS 1B.1.2

WBS 1B.2 WBS 1B.2

Goal 1B

Theme 1

Mission

February 2012 Recent GAO Testimony

Benefits of using OPPM for PPBE

• Flexibility in linking mission to work scope activities

• Ability to identify key activities and group them in various portfolios to identify true cost of capabilities and products produced in an organization

• Budget transparency which enhances justification for funding

• Support for the full PPBE lifecycle

Demonstration

Department of Energy OPPM Implementation