Integrated Budgeting, Forecasting, and Planning

Introduction:

All plans require understanding the market and estimating future results. It is the estimation of future results that is essential for preparing an adequate budget for any needs. While strategy defines how and where a company aims to be in the future, budgeting addresses the actions required in the present to realize these strategies. It presents a complete assessment of the actions needed for attaining short-term goals.

This course on Budgeting, Forecasting, and Planning Process examines the interdependence among these elements: strategies, their implementation through budgets, and the evaluation of strategies and budgets using forecasting techniques. It seeks to help participants develop skills aimed at effective accomplishment of each part of the financial planning process.

Objectives:

The completion of this course on Budgeting, Forecasting, and Planning Process will enable the participants to achieve the following:

• Effectively understand and perform the process of planning and budgeting.
• Estimate cash flows in the right manner and correctly use forecasting, planning, budgeting, and other statistical techniques.
• Determine the cost of capital and evaluate projects using appropriate financial models.
• Make use of scenario analysis and prepare for different situations.
• Interpret and manipulate financial data using sophisticated Excel skills.
• Develop and control the budget using Budget Control approaches.
• Develop a sound understanding of integrated planning, budgeting, and forecasting.
• Grasp different types of cost systems and their use in various activities.
• Apply improvements to cost systems using ABC.
• Appraise the advantages and disadvantages of an ABC system.
• Use the Balanced Scorecard as an important Management Control System.

Training Methodology:

• Case Studies
• Interactive Workshops
• Group Discussions
• Simulations
• Role Plays
• Scenario Analysis

Course Outline:

Unit 1: Planning for Success

• What are the strategies of planning?
• Cycle planning.
• Strategic analysis and strategic choice of objectives.
• Implementing strategies.
• Organizational objectives and corporate and shareholder value.
• Agency problems and corporate governance solutions.
• Operating and financial plans and the working capital needs.
• Financial planning in order to grow and build financial models.
• Establishing Key Performance Indicators (KPIs).
• Balanced Scorecard (BSC) overview.

Unit 2: The Forecasting Process

• What is the purpose of your forecast and what target do you want to achieve?
• The general approach to data analysis, including statistical analysis.
• Five general ways of estimating and forecasting – quantitative analysis.
• Methods of Forecasting:
  • Univariate Analytic Models
  • Time Series
  • Moving Averages
  • Exponential Smoothing
  • Trend Development
• Causal Models – Regression Analysis.

Unit 3: The Budget Process

• A commitment in a period requires understanding why a budget is needed and what objectives it should seek.
• Interrelation between Planning and Control.
• Fiscal discipline – the construction costs and revenues budget.
• The phases of the budget process.
• The notion of budgeting and its preparatory process.
• Management of the number of personnel and labor expenditures in the budget.
• Accounting for depreciation in the budget.
• Completing the budgeting cycle.

Unit 4: Balancing Control

• Control of costs.
• Target cost and standard cost.
• Using flexibility in the budgets.
• Analysis of variances and the causes of the variance.
• Controlling and handling variances properly.

Unit 5: Expense Budgeting - ABC and ABB

• The linkage between the particular activity and the cost that it incurs.
• Activity and operations.
• Investigate up and undercosting until there has been a redistribution of costs from one product to another.
• The specifics of Activity-Based Costing (ABC).
• Activity-Based Costing for cost system improvement.
• Activity-Based Costing as a tool in cost management.
• Construction of ABC systems.
• Cost dimensions and price determinants.
• Pros and cons of the ABC system.
• Move away from the conventional approach towards planning by Activity-Based Budgeting (ABB).
• The management and planning process of ABB.
• Take into account incentives and conduct while budgeting.