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Management control

Budgeting, Forecasting and Variance Analysis

A working method to build the budget, update forecasts during the year and read the variances between targets and results.

Reference duration
16 hours
Structure
4 sections · 16 one-hour chapters
Approach
Operational, forward-looking, managerial
Bring this course to your team

What people learn

  1. 01

    Set up a consistent budgeting process.

  2. 02

    Build operating budgets by business area.

  3. 03

    Connect sales, production and financial targets.

  4. 04

    Read variances between budget and actual.

  5. 05

    Build periodic control reports.

How it runs

  1. 01 · 4 hBudget logic and architecture
  2. 02 · 4 hBuilding operating budgets
  3. 03 · 4 hForecasts and scenarios
  4. 04 · 4 hVariance analysis and reporting

Programme

4 sections, 16 hours.

Durations and programmes are the reference structure: content, level, examples and format are agreed with each company.

  1. 014 h

    Budget logic and architecture

    1. The budget as a management toolPlanning, coordination and accountability of functions.
    2. Budget, business plan and controlStrategic plan, annual budget, forecast and reporting compared.
    3. The budgeting processStages, owners, calendar, data collection, negotiation and approval.
    4. The master budgetSales, production, purchasing, staff, overheads, investment and projected statements.

  2. 024 h

    Building operating budgets

    1. Sales budgetVolumes, prices, mix, customers, channels, markets and seasonality.
    2. Production and purchasing budgetRequirements, materials, stock, lead times and capacity.
    3. Staff and overhead budgetHeadcount, labour cost, advisory fees and indirect costs.
    4. Projected income statement and marginsProjected income statement, expected margins and sustainability.

  3. 034 h

    Forecasts and scenarios

    1. Periodic and rolling forecastsUpdating forecasts during the year and replanning.
    2. Budget drivers and sensitive assumptionsPrices, volumes, mix, efficiency, materials, energy, labour cost.
    3. Scenario analysisBase, optimistic and prudent scenarios and stress tests.
    4. Operating budget and cash needsWorking capital, receipts, payments, investment and liquidity.

  4. 044 h

    Variance analysis and reporting

    1. The logic of variance analysisBudget, actual and forecast; absolute, percentage and normalised variances.
    2. Price, volume, mix and efficiency variancesBreaking variances down and reading their causes.
    3. Monthly budget-versus-actual reportStructure, indicators, management commentary, alerts and actions.
    4. Lab: budget and variancesA numerical case with budget, actual, variances and commentary.

Let’s fit the course to your team’s work.

Durations and programmes are the reference structure: content, level, examples and format are agreed with each company.

Plan the course

How training runs

  1. 01Company coursesCommon ground for people who work with data and models.
  2. 02Solution trainingBy role, on the tools and models that were adopted.
  3. 03Everyday useRepeatable processes and independent users.