The Savings Management Module is designed to align with standard savings methodologies used by most organizations. This guide explains how savings are calculated, including:
Cost Reduction vs. Cost Avoidance
How projected and realized savings are calculated
Steps to track savings effectively
📌 All savings are categorized into two types:
Cost Reduction – Savings achieved by reducing actual costs incurred.
Cost Avoidance – Savings achieved by avoiding potential future costs.
🚀 Currency rates against individual savings milestones can be updated at any time.
Updating an exchange rate against an uncompleted milestone will alter its overall value.
Find out more in the Currency Exchange Guide.
Projected Savings
Once you have determined the savings category, you can enter projected savings amounts into the relevant fields within a milestone.
📌 Projected Savings = Total Savings Expected at the Start of the Project
Baseline Spend
Each milestone must include a Baseline Spend value.
📌 Baseline Spend = The estimated total cost at the beginning of a project.
Example: If a contract spans one year, the total contract cost over that year serves as the Baseline Spend.
Projected savings represent the amount saved from renegotiating the contract or reducing supplier costs.
Total Savings Calculation
Once all values are populated, oboloo automatically calculates the projected savings per milestone.
How the Calculation Works:
1️⃣ Input Values
Enter the total projected savings per milestone under Cost Reduction or Cost Avoidance.
2️⃣ Calculation Formula
Projected Savings % = (Total Projected Savings ÷ Total Baseline Spend) × 100
Example Calculation:
Projected Savings = £40
Total Baseline Spend = £200
Savings Calculation: £40 ÷ £200 = 20%
Realizing Savings
Once projected savings are calculated, the next step is to determine Realized Savings.
📌 Realized Savings = The actual savings achieved when a milestone is completed.
Realized savings may differ from initial projections.
How to Calculate Realized Savings:
1️⃣ Input Realized Savings
When marking a milestone as complete, enter the actual savings achieved in the milestone form.
Follow the Milestone Completion Guide for detailed steps.
2️⃣ Calculation Formula
Realized Savings % = (Total Realized Savings ÷ Total Baseline Spend) × 100
📌 Example:
Projected Savings for the Last Milestone = £20
Actual Realized Savings = £35
New Savings Percentage is calculated based on the final realized savings instead of the projected amount.
Key Considerations & Best Practices
✅ Distinguish Between Cost Reduction & Cost Avoidance – Properly categorizing savings ensures accurate reporting.
✅ Update Currency Exchange Rates if Needed – Adjustments to exchange rates impact savings values in multi-currency projects.
✅ Regularly Review Savings Milestones – Tracking realized vs. projected savings helps monitor financial efficiency.
✅ Ensure Accurate Baseline Spend Entries – This ensures that savings percentages are calculated correctly.
✅ Compare Projected vs. Realized Savings – Reviewing final savings data helps improve future procurement decisions.
Additional Resources
📌 Related User Guides:
Milestones Overview – Learn how to track savings at different stages of a project.
oboloo Savings Management – How does Savings Management work in oboloo
Add A New Currency – How to add a n ew currency in oboloo.
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