"Change brings opportunity." – Nido Qubein

Budget Set Up

Setting Up Resource Plan and Cost Plan in SPM/PPM

Recommended Setup Sequence
  1. Create the Demand/Project
  2. Set Up Resource Plan: Navigate to the Related Lists > Resource Plans tab (or use Resource Management Workspace). Define resources, effort, and dates. This auto-generates a labor Cost Plan if rates are configured.
  3. Refine or Create Cost Plans: Go to the Financials tab, review/update the auto-created Cost Plan, and add manual ones for other categories. Set breakdowns by fiscal periods and create baselines.
  4. Link and Integrate: Link to time cards/expense lines for actuals, which update both plans for variance analysis.
  5. Allocate/Approve Budget: Use the aggregated Planned Cost from Cost Plans to request and set the Project Budget (e.g., via portfolio approval or direct field update). Create baselines for variance tracking.
  6. Track and Adjust: Monitor actuals against the budget, with Cost Plans enabling detailed re-forecasting.

Processes discussed—such as setting up Resource Plans, Cost Plans, Rate Models, financial planning, and budget tracking in SPM and Project Portfolio Management (PPM)—largely work for Demands in Demand Management as well. Demands are essentially the “pre-project” stage, where initial ideas or requests are captured, assessed, and estimated before potential conversion to projects, enhancements, or other entities. ServiceNow treats Demands similarly to Projects in many financial and resource aspects to enable early forecasting and decision-making. Key similarities and differences are explained below.

Key Similarities: How the Process Works for Demands

  • Resource Plans for Demands: Just like for Projects, you can create Resource Plans directly on a Demand record to estimate required effort (e.g., hours, FTEs) by roles, users, or groups. This is done early in the Demand lifecycle (e.g., during the Qualified or Approved stage) to assess feasibility against capacity.
    • Setup: Navigate to the Demand form (Demand > Demands > [select a demand]) > Related Lists > Resource Plans tab. Create a new Resource Plan, associate resources, and it will auto-generate or link to Cost Plans if a Rate Model is applied.
    • Why it works: Resource Plans help in Demand Workbench prioritization by factoring in effort and availability, similar to Projects.
  • Cost Plans for Demands: Cost Plans are fully supported for Demands and often come after Resource Plans (for labor costs) or can be created manually for non-labor estimates (e.g., hardware, vendors). They break down costs by fiscal periods, categories (CapEx/OpEx), and tie into overall Demand scoring (e.g., Size/Effort metric).
    • Setup: In the Demand form > Financials tab > Create Cost Plans. Aggregated Planned Costs from these plans inform the Demand’s financial metrics, variances, and forecasts.
    • Automation: If a Resource Plan exists, labor Cost Plans auto-populate based on rates.
  • Rate Models for Demands: Rate Models apply identically to Demands as they do to Projects. Associate a Rate Model with a Demand’s Resource Plan to dynamically calculate hourly costs based on resource attributes (e.g., role, location).
    • Setup: When creating a Resource Plan on the Demand, select the Rate Model from the dropdown. Rates will derive costs for planned/actual hours, feeding into Cost Plans.
  • Budget Tracking and Financial Planning: Demands can have full financial planning, including Benefit Plans (for ROI estimates), baselines for variance analysis, and integration with portfolio-level budgeting. This allows tracking of Demand budgets against actuals (via expense lines or time cards) and supports scenario planning in Portfolio Workbench.
    • Setup: Use the Financials tab on the Demand form for plans and baselines. For portfolio integration, Demands appear in Scenario Planning or Investment Funding as potential investments.
    • Benefits: Enables early identification of high-value Demands, with costs rolling up to portfolios for holistic tracking.
  • Overall Workflow Alignment: The sequence (Resource Plan → Cost Plan → Budget Allocation/Tracking) mirrors Projects. For Demands, this often starts in the Screening/Qualified stage to support scoring, prioritization, and approval in the Demand Workbench. Upon approval, these plans seamlessly transfer during conversion to a Project (e.g., via “Create Project” action), maintaining traceability.

Key Differences for Demands vs. Projects

While the core mechanics are the same, Demands are more estimation-focused and less execution-oriented:

  • Scope and Maturity: Demands typically use these for high-level estimates (e.g., rough order of magnitude) rather than detailed tracking. Projects build on this with more granular actuals during execution.
  • States and Triggers: Resource/Cost Plans on Demands are often in “Requested” or “Draft” states until approval. Conversion to Project shifts them to “Allocated” or active tracking.
  • Integration Points: Demands feed into PPM but don’t have full execution elements like task-level breakdowns until converted. However, you can still track preliminary actuals if work starts pre-conversion.
  • Visibility: In Demand Manager Dashboard or Workbench, financials from these plans influence bubble charts (e.g., Risk vs. Value with Cost/Size as bubble size), which isn’t as prominent in pure Project views.
  • Limitations: Not all advanced PPM features (e.g., certain agile integrations) apply until conversion, but basics like rate-derived costs and budget variances do.

Setup Recommendations for Demands

  1. Prerequisites: Ensure plugins like Demand Management (com.snc.demand_management) and PPM Standard are active. Set up fiscal periods and Rate Models first (as global foundations).
  2. Basic Flow:
    • Create/Open a Demand (Demand > Demands > New).
    • Add Resource Plan (Related Lists > Resource Plans > New; select Rate Model).
    • Add Cost/Benefit Plans (Financials tab).
    • Set Baselines and track via dashboards.
  3. Best Practices: Start with Resource Plans for accuracy, use Predictive Intelligence to suggest similar past Demands for estimates, and customize workflows (via Flow Designer) for auto-approvals. Test conversions to ensure data transfers cleanly.
  4. Common Pitfalls: If rates don’t apply, check Rate Model associations or resource attributes. For large volumes, use bulk actions in Demand Workbench.

This unified approach in ServiceNow ensures consistency from Demand intake to Project delivery, reducing silos and improving ROI decisions. If you mean a specific part of the process (e.g., Rate Models only) or have a release/version in mind, let me know for more tailored details!

In SPM and Project Portfolio Management (PPM), the Resource Plan comes first in the setup sequence, as it serves as the foundation for resource allocation and often automatically generates or influences associated Cost Plans for labor-related expenses. This order ensures accurate capacity planning before diving into detailed financial breakdowns, aligning effort estimates with costs.

  • Resource Plans as the Driver: Resource Plans outline the required resources (e.g., users, groups, or roles) for a project, demand, or task, including estimated hours, FTEs, or effort. They are created early to assess availability and request allocations via the Resource Management module. Once approved, they can auto-create Cost Plans by applying resource rates (from rate cards or models) to calculate labor costs. This linkage prevents redundant data entry and ensures costs reflect real resource commitments.
  • Automation and Dependency: When you create a Resource Plan (e.g., in the Project Workspace or Resource Allocation Workbench), the system triggers Cost Plan creation if a rate model is associated. Changes to the Resource Plan (e.g., updated hours or rates) automatically update the linked Cost Plan’s planned costs. Without a Resource Plan, you’d miss this automation for labor costs, leading to manual Cost Plan setup.
  • Standard Workflow Alignment: In typical PPM processes, resource planning precedes financial planning to confirm feasibility. For example, you might create a Resource Plan at the project task level, which rolls up to the main project and generates costs.
When Cost Plan Might Come First or Independently
  • Non-Labor Costs: Cost Plans can be created manually first for non-resource expenses (e.g., hardware, travel, or vendor costs) without needing a Resource Plan. In these cases, the order is flexible, but for integrated tracking, resources are still planned early.
  • Top-Down Scenarios: In portfolio-level planning (e.g., via Scenario Planning), high-level Cost Plans might be estimated first for budgeting, with Resource Plans following to detail execution. However, this is less common for project-specific setup.

This sequence optimizes for accuracy, as resource availability directly impacts costs.

Rate Models in ServiceNow are a key component of the Strategic Portfolio Management (SPM) suite, specifically within Resource Management and Project Portfolio Management (PPM). They provide a flexible, criteria-driven framework for defining and applying hourly cost rates to resources involved in projects, demands, or other work entities. This allows organizations to accurately calculate planned and actual labor costs based on factors like resource roles, skills, locations, or custom attributes, ensuring better financial forecasting, budgeting, and alignment with business objectives.

Definition and Purpose

  • Definition: A Rate Model is a configurable entity that stores date-effective hourly rates for resources. It uses conditional rules (rate lines) to derive costs dynamically—for example, applying different rates based on a resource’s role (e.g., Developer vs. Project Manager), geographic location (e.g., US vs. India), or resource type (e.g., internal employee vs. external contractor). Rates are “date-effective,” meaning they can change over time (e.g., inflation adjustments or contract renewals) without affecting historical calculations.
  • Purpose: The primary goal is to automate cost calculations for resource plans, reducing manual effort and errors. This supports:
    • Accurate estimation of project/demand costs during planning.
    • Real-time tracking of actual costs via time cards or expense lines.
    • Compliance with financial reporting standards by providing audit trails.
    • Differentiation in costing for diverse resource pools, such as varying rates by region or skill level to reflect real-world economics.

Rate Models are stored in the rate_model table and are essential for organizations managing large portfolios where resource costs vary significantly.

How Rate Models Work

Rate Models operate through a hierarchical and conditional structure:

  1. Rate Lines: Each Rate Model contains multiple “rate lines” (records in the rate_line table), which define specific rates based on criteria. For instance, a rate line might specify: “If role = Developer and location = US, then rate = $100/hour.”
  2. Application to Resource Plans: When a Resource Plan is created for a project or demand, you associate a Rate Model with it. The system evaluates the resource’s attributes against the rate lines to determine the applicable rate.
    • Planned Costs: Calculated as (Estimated Hours/FTE) × Hourly Rate from the model.
    • Actual Costs: Derived from logged time (e.g., via time cards) multiplied by the rate.
  3. Automation: If a matching rate line isn’t found, the cost defaults to $0 (or a fallback rate if configured). Changes to rates propagate to linked cost plans, updating forecasts automatically.
  4. Date-Effectiveness: Rates can have start/end dates, allowing historical accuracy (e.g., a rate increase mid-project only affects future hours).

Order of Rate Application

ServiceNow applies rates in a specific priority order to ensure the most granular or overridden rate is used:

  • Rate Override on Resource Plan: If a manual override rate is specified directly on the Resource Plan, it takes precedence (e.g., for negotiated contracts).
  • Rate Model: The primary source, inherited from the associated project or demand. It evaluates rate lines based on resource attributes.
  • Fallback Levels (if no Rate Model match): The system does not automatically fall back to other rates like User Rate, Group Rate, or Role Rate for Resource Plans in PPM/SPM. These are legacy or separate mechanisms:
    • User Rate: A per-user rate defined on the user record.
    • Group Rate: Rates for resource groups.
    • Role Rate: Rates tied to ITIL roles. However, for non-PPM work (e.g., incidents), these might apply, but in SPM, Rate Models are the standard for projects and demands. If no rate is found, costs may remain at $0, requiring manual intervention.

This order is reflected in fields like Planned Cost and Confirmed/Allocated Cost on the Resource Plan.

Configuration Steps

To set up a Rate Model:

  1. Navigate to Rate Models: Go to All > Project Administration > Rate Models (or search in the application navigator).
  2. Create a New Rate Model:
    • Click New.
    • Enter a Name (e.g., “US Internal Rates”) and Description.
    • Optionally, set Start Date and End Date for the model.
    • Click Submit to save.
  3. Add Rate Lines:
    • In the Rate Model form, go to the Rate Lines related list.
    • Click New.
    • Define criteria (conditions) using the condition builder (e.g., “Resource Role is Developer” AND “Location is US”).
    • Set the Hourly Rate (e.g., $100).
    • Add start/end dates if needed.
    • Submit and repeat for other criteria.
  4. Associate with Projects/Demands:
    • When creating a Resource Plan (in Project Workspace or Demand form), select the Rate Model from a dropdown.
  5. Test and Validate: Create a sample Resource Plan, assign resources, and verify cost calculations in the Financials tab.

Out-of-the-box (OOTB), ServiceNow provides a “Standard Rates” model with default rates for common roles like Project Manager ($150/hour), Developer ($100/hour), etc. Customize or duplicate this for your needs.

Examples

  • Simple Example (Internal vs. External):
    • Rate Model: “Internal Rates” with lines: Project Manager = $80/hour, Developer = $60/hour, Business Analyst = $50/hour.
    • Rate Model: “External Rates” with lines: Project Manager = $120/hour, Developer = $90/hour, Business Analyst = $70/hour.
    • For a project with 100 hours per role:
      • Internal Total: (100 × 80) + (100 × 60) + (100 × 50) = $19,000.
      • External Total: (100 × 120) + (100 × 90) + (100 × 70) = $28,000.
    • Application: Select “Internal Rates” for employee resources in the Resource Plan; costs auto-calculate.
  • Geographic Example: A “US Rates” model with higher rates ($150/hour for Developers) vs. “India Rates” ($80/hour). Assign based on resource location for global teams.
  • Attribute-Based (from Reddit context): If a Resource Plan type is “Attribute,” rates are derived from the Rate Model’s conditions matching the resource’s attributes (e.g., skills or certifications), not fixed roles.

Integration with Other Modules

  • PPM and Demand Management: Rate Models integrate seamlessly with Resource Plans in PPM. When a demand converts to a project, the Rate Model carries over, feeding into Cost Plans for financial planning. Costs roll up to portfolio dashboards for ROI analysis.
  • Financial Management: Linked costs update Benefit Plans, variances, and forecasts in the Financials tab.
  • Time Card Management: Actual hours from time cards use the Rate Model for cost computation.
  • Portfolio Planning: Aggregated costs from Rate Models inform scenario planning and investment funding decisions.
  • Custom Integrations: Can extend to other apps via scripts or Flow Designer for advanced scenarios, like pulling rates from external HR systems.

Rate Models do not apply to non-PPM work (e.g., incidents) OOTB, focusing on strategic initiatives.

Best Practices and Common Issues

  • Best Practices:
    • Use granular rate lines for accuracy but avoid over-complexity to prevent matching failures.
    • Regularly review and update rates for date-effectiveness (e.g., annual adjustments).
    • Leverage OOTB “Standard Rates” as a template; create region/resource-type specific models.
    • Integrate with resource attributes (e.g., CMDB for locations) for dynamic application.
    • Test in a sub-prod instance: Simulate Resource Plans to validate cost outputs.
    • Monitor via reports: Use Performance Analytics for rate utilization trends.