Question

1. How often should project financials be reviewed and re-forecasted if required?

Answer 1

1. The Project financials should be reviewed as and when necessary (i.e Monthly, Quarterly etc..) depending upon the changes in factors on the basis of which the financials are prepared.
2. A project that is left to run without budget management (review) and re-forecasting will result in failure. Any project if not properly reviewed will automatically puts the project at risk of budget overruns.
3. Whenever the shareholders of the view that the project is not running according to the budget or financials prepared, the financials need to be reviewed.
4. There may be several factors like sales, production expenses, administration expenses which may lead to review of project financials.
5. Every one thinks that project financial forecasting is single-time activity which need not be reviewed. However it should be continuously monitored with the actual exposure and should make changes as warranted by changes in circumstances.
6. Project forecasting mainly involves making conjectures about future performance, which can help managers to decide whether to create new projects and to continue with the existing projects.
7. Organizations expect the entire forecasting process to be quick, self-managed, and accurate. It should be a process that allows them to propel the business forward and upward and it should allow them to identify risks and opportunities that are in the horizon.
8. A re-forecasting of Financials mainly relies on real world data and a way to inform your company whether adjustments need to be made.
9. Most companies struggle with forecasting because the process takes too much time to complete and the figures need constant verification which adds even more time to the already unnecessarily long process.

• In order to ensure successful re-forecasting the financials the main essential points one should be aware of are:​​​​​​  

1. ​​​​​​​Use a re-forecasting model: In order to achieve a more prompt forecasting process, you must do away with traditional methods and start using re-forecasting models which mainly considers business drivers and standard costs so that u can calculate several key variables such as revenue and expenses.
2. Incorporate and Automate: A re-forecast is relevant only if it carries with it the details that front-liners and managers in operations need daily. It is important to use statistical functions while re-forecasting ,so that the length of time needed to complete the entire re-forecasting cycle can be reduced significantly.
3. Use real-time what if modeling: Moving to real-time forecasting is key now. It is therefore important that you have the ability to do what if modelling or what if analysis so that you and all the people involved in the planning do not have to deal with the problems associated when using spread sheets.