Longer-term business plans and infrastructure projects at port authorities must balance expected demand with capacity to support investment decisions. When the design and construction of port infrastructure can take five to ten years, and new infrastructure is used for at least 50 years, using planning tools that flex for changing circumstances is extremely important.
If demand forecasts and estimates of future financial position are poor, this leads to bad investment decisions, the wrong timing of the investments or a misallocation of resources. And given that ports are so often linked to economic development and success of regions, markets and countries, poor planning can have both public and private consequences.
In our experience, there are four key factors that port authorities need to take into consideration when choosing a long-term planning tool.
- Being able to plan for all horizons with accurate data continuously.
Port authorities must plan with accurate current and historical data gathered from all corners of the business. To do this, you need to have all your quantitative data in your planning system and to have confidence that it is accurate.
Many ports struggle with gathering the data to start continuous planning. They export data from different systems and then manually analyse and plan in spreadsheets. This is time-consuming and has a high risk of naccuracies due to the volume of variables.
- Being able to easily change assumptions and drivers.
The nature of planning for port authorities means that you'll often need to change your drivers based on macroeconomic factors, such as the recent Covid-19 pandemic or extreme weather events like floods or hurricanes. When systems make this difficult, or you must spend hours re-checking macros and other manual calculations, then this introduces risks of inaccuracies and impacts the quality of your decision-making.
Good financial planning tools should let you easily update drivers and seamlessly roll out the change to all the affected plans.
- Enabling stakeholders to contribute easily.
Planning at ports isn't only the responsibility of the finance team.
Getting internal stakeholders involved, who have a more in-depth understanding of the historical data or the drivers influencing port demand, for example, affects forecast accuracy. However, it is extremely time-consuming if you aren't using tools to help manage the workflows and contributions of stakeholders. Endlessly chasing colleagues for updates and then wrangling their recommendations into wider business plans is too time-consuming and risks the plan's integrity.
- Modelling expected and unexpected events impacting the bottom line.
At port authorities, base operating costs are generally fixed with staff and equipment on standby irrespective of whether the port expects one ship to unload or two. Any decrease in the amount of cargo handled or unanticipated maintenance of assets like container cranes can seriously impact the bottom line.
Good financial planning tools have modelling capability and predictive AI built in.
In this post, we'll discuss how Six Degrees Planning solves these issues and why it's a great solution for high integrity long horizon planning at port authorities.
(Rather than spending hours manually stitching data together from multiple spreadsheets and losing confidence in the results)
Using Six Degrees Planning, you can prepare short, medium and long-termplans using top-down planning, bottom-up planning, or a combination of the two. You can access all your data in a single source – actuals, historical budgets and forecasts. This gives an enormous head start for planning projects compared to using spreadsheets.
Six Degrees Planning also has a series of interlinked modules to map out your projected financial performance, revenue, capital investments and people needs. When you're rolling out productivity improvements in the medium term, these will impact the capacity of the operations and the number of port workers you'll need, for example. Or you’ll need to understand the impact on future projected cashflows (seen in the financial performance views) if you’re using different financing options for example. Because Six Degrees Planning is cloud-based, all contributors plan using the same real-time data and any issues relating to version control are removed. The days of insecure file-sharing or laborious manual workarounds are gone.
Easily map out changes to drivers for changing scenarios
(All inside Six Degrees Planning, without needing to manually update macros or calculations)
Using Six Degrees Planning, you can easily change core assumptions, such as volume of containers and frequency of ship visits. Running scenario and sensitivity analysis knowing that changes to the core assumptions have been accurately reflected in your baseline means that you make progress quicker and more accurately.
Manage and track contributions from stakeholders
(Without sending multiple emails and losing the context of why changes were made)
Six Degrees Planning uses workflows to manage stakeholder contributions for better planning, and better accountability and ownership of future plans. Decentralising planning and putting more control in the hands of the people who know the area best improves planning and forecasting. Visualising performance and modelling scenarios brings it all together.
Workflows include a timeframe for response, limit views and contributions to specific business units. The built-in change logs and comments section lets you understand the context behind the changes.
Run what-if scenarios on demand
(Stop working long hours at a moment's notice)
Built-in what-if scenario modelling comes as standard in Six Degrees Planning.
External factors often impact the volume of throughput through ports. For example, when local crops are impacted by weather events, quickly informing your board of the potential bottom-line impact is an absolute must. When this capability is built in, the process of what-if modelling becomes faster and more accurate than manual spreadsheet modelling.
For port authorities (and others) long term planning in spreadsheets is difficult, time-consuming, and filled with the potential for errors and mistakes. Unlike many other businesses that have a little more flexibility to absorb planning risks, the impact for port authorities in poorly executed long term planning will stick around longer in poorly planned capital investments, missed opportunities for growth and wider economic losses.
When you adopt an advanced planning tool, like Six Degrees Planning, you’ll leave the pain of long term spreadsheet planning far behind. Start your journey to more connected, robust planning without cumbersome spreadsheets today – ask about a demo today. We'd love to show you around.