SAFe® 5 Lean Portfolio Management SAFe® 5 Lean Portfolio Management Financial Management & Budgeting 1 — Questions and Answers
Question 1: What is the primary mechanism SAFe® 5 uses to fund work within a Lean Portfolio?
- Annual project budgets
- Lean Budgets allocated to Value Streams (Correct answer)
- Individual team budgets approved quarterly
- Fixed-price contracts per Epic
Correct answer: Lean Budgets allocated to Value Streams
SAFe® 5 uses Lean Budgets allocated to Value Streams rather than funding individual projects, enabling faster flow and reducing overhead.
Question 2: In SAFe® 5, what is 'participatory budgeting'?
- Executives unilaterally setting all budgets
- A process where portfolio stakeholders collaborate to allocate Lean Budgets across Value Streams (Correct answer)
- Individual teams negotiating their own funding
- An annual budget review led by Finance only
Correct answer: A process where portfolio stakeholders collaborate to allocate Lean Budgets across Value Streams
Participatory budgeting involves portfolio stakeholders collaborating to allocate Lean Budgets, increasing buy-in and alignment with business priorities.
Question 3: How often should Lean Budget guardrails typically be reviewed in SAFe® 5?
- Monthly
- Every PI (Program Increment) (Correct answer)
- Annually
- Only when a major Epic is approved
Correct answer: Every PI (Program Increment)
Lean Budget guardrails are reviewed at least every PI to reflect changing business conditions and portfolio priorities.
Question 4: What is the purpose of 'Lean Budget guardrails' in SAFe® 5?
- To define detailed line-item spending rules for each team
- To establish spending policies that guide investment decisions within Value Streams (Correct answer)
- To prevent any budget changes during a PI
- To track individual employee expenses
Correct answer: To establish spending policies that guide investment decisions within Value Streams
Lean Budget guardrails provide spending policies that guide how Value Streams invest their budgets without prescribing every expenditure.
Question 5: In SAFe® 5, which statement best describes the difference between CapEx and OpEx in the context of Lean Budgets?
- All Agile work is classified as OpEx
- Understanding CapEx vs OpEx helps organizations optimize tax treatment and financial reporting of portfolio investments (Correct answer)
- CapEx funds only hardware; OpEx funds only software
- SAFe® eliminates the need to distinguish between CapEx and OpEx
Correct answer: Understanding CapEx vs OpEx helps organizations optimize tax treatment and financial reporting of portfolio investments
Understanding CapEx vs OpEx distinctions helps organizations optimize the financial and tax treatment of their portfolio investments in SAFe®.
Question 6: What does 'decentralized decision-making' mean in the context of SAFe® 5 portfolio funding?
- All financial decisions are made by individual contributors
- Value Stream stakeholders have authority to make day-to-day spending decisions within guardrails (Correct answer)
- The CFO delegates all budget authority to Scrum Masters
- No one has authority to approve spending without executive sign-off
Correct answer: Value Stream stakeholders have authority to make day-to-day spending decisions within guardrails
Decentralized decision-making empowers Value Stream stakeholders to make spending decisions within established guardrails, reducing delays and bureaucracy.
SAFe® 5 Lean Portfolio Management SAFe® 5 Lean Portfolio Management Financial Management & Budgeting 1
What is the primary mechanism SAFe® 5 uses to fund work within a Lean Portfolio?