Understand Investment vs. Spend in Jira Align

Summary

This article explains the difference between Investment and Spend in Jira Align and highlights the importance of this report for financial management.

Solution

What is Investment?

Investment represents the total approved budget allocated to a strategic initiative, Theme, or Epic. It's a fixed amount that acts as a spending cap. Think of it as the "total planned expenditure." Investment is typically defined at the beginning of a planning period (PI Planning). It remains static throughout the execution of the work unless formally revised through a budget change request.

What is Spend?

Spend refers to the actual costs incurred during the execution of the work. This includes resource costs, material costs, and other expenses directly related to the initiative. Spend increases as work progresses. Think of it as "how much we've spent so far." Spend is typically calculated based on actuals reported against the work items (Stories, Tasks, etc.) associated with the initiative.

Why is understanding the difference important?

Understanding the difference between Investment and Spend is crucial for effective financial management in Jira Align. It allows you to:

• Track budget adherence: By comparing Spend against Investment, you can monitor how closely your actual costs align with your planned budget.

• Identify potential overruns or savings: Early identification of discrepancies allows for proactive adjustments and prevents costly surprises.

• Make informed decisions: Accurate financial data empowers data-driven decision-making regarding resource allocation, prioritization, and future investments.

• Improve forecasting accuracy: Analyzing historical Spend data can improve the accuracy of future Investment estimations.

How does Jira Align calculate Spend?

Jira Align calculates Spend based on the actual effort logged against work items linked to the Feature, Epic, Capability, or Theme. This calculation considers the assigned resources' hourly rates and the time they've spent working on those items. Other cost types, such as material costs, can also be factored in if configured within Jira Align. The specific mechanisms for capturing actuals can be customized based on your organization's needs.

Example:

Let's say your company has an Epic with an approved Investment of $100,000. As your team works on the Stories within that Epic, they log their time.

If the team's hourly rates total $500 per day and they work for 10 days, the Spend will be $5,000.

Jira Align will then display the Investment as $100,000 and the Spend as $5,000, allowing you to track the remaining budget and identify any potential deviations.

Reporting in Jira Align:

A few reports within Jira Align leverage Investment and Spend data. These reports provide various perspectives on financial performance, including:

• Investment vs Spend: Directly compares Investment and Spend for selected initiatives.

• Program Increment (PI) Burndown: Tracks planned vs. actual spend within a PI.