Portfolios should have a single budget (albeit broken down into CapEx and OpEx) that covers all innovation, change and run for the portfolio and all sub-portfolios. This should be agreed as part of a multi-year settlement agreement, with an annual adjustment and draw down based on performance via an Annual Balance of Investment process. Portfolios will have the ability to veer and haul within this budget, but within a set of agreed guardrails that define the limits within which local decisions can be made without further approval or review. Portfolios may choose to hold some budget back as contingency for unexpected in-year events.
Portfolios that primarily manage sub-portfolios may choose to retain some budget to be spent at their level (for example on Delivery Teams doing innovation). Otherwise, the primary usage of budget is expected to be on securing and resourcing Delivery Teams, buying capacity that can be used to deliver innovation, change and run.
If Delivery Teams are aligned to change and run, then management of CapEx and OpEx should broadly align to the processes used today across projects and operations. However, if Delivery Teams are performing innovation, change and run, then the management of OpEx and CapEx becomes more complex, however several techniques can be used – for example calculating CapEx and OpEx spend via the allocation of the team’s time (either agreed up front or recorded after the fact) across innovation, change and run activities.