As discussed throughout this Budget Management Series, Program and Project Managers represent a vast clearinghouse of relevant new information. Information that is current, real, interactive and informative. A financial report that incorporates rolling projections will allow these managers to get their knowledge into a real-time report in a communicative manor that will give you and your organization the mechanism to be nimble, leading edge and change sensitive.
A rolling projection reporting system allows program and project managers to get relevant new information into the budget process and to the management team on a real-time basis. This is how the process works:
- It all begins with a timely month-end close by the accounting department and issuance of standard monthly financial reports.
- Using Excel® or other reporting system, drop in current year-to-date revenue and expense results from the financial reports into a spreadsheet to sit along side the annual budget and year-to-date budget.
- Note that the year-to-date budget is derived from a real-time (expected) basis, where you best anticipate that budgeted revenue and expenses will occur throughout the coming year. Based on this expectation the annual budget is allocated over the 12 months of the fiscal year.
- Next insert a column for the remaining months of the budget year to give you an initial projection for year-end where these remaining months of the budget are added to the year-to-date actual results.
- For example, based on a calendar year-end organization at the 3 month mark which would be at the end of March, the year-to-date budget column would contain 3 months from the real-time budget allocation and the remaining budget column would contain the 9 remaining budget months. The real-time monthly budget allocation would be prepared before the year gets started.
- This is not an accounting drill. This process of dropping in the freshest of fresh information by the program and project managers will provide an ever evolving look at the future we call year-end.
- Now the magic. Insert a blank column just after the remaining budget column for use by the program and project managers where they can insert changes based on current known new information. This is where these managers are given the opportunity to interact with the future by plugging in what they know is currently happening differently on the ground from the original budget for the remainder of the year.
This look into the future of what end of the year results will look like is powerful and behavior changing. When you make sure that this projection process is driven by the program and project managers and is refreshed and updated each month, the resulting projection reports will benefit all who come in contact with them and help stir your organization to improved outcomes. Next, I will discuss how to get these managers into a room together to work with this information and collectively drive the organization to a brighter future.
