Kevin is leading a 4 day training event later this year. Budgeting and cost control for managers. In this episode Kevin and Graham talk to you about the importance of getting this aspect of your business right. They tell you why traditional budgeting really isn't fit for purpose any more.



Budgeting and Cost Control for Managers is running in London from 13 - 16 June 2017 and you can find more information here.

This 4 day training course is ideal for senior managers who are involved in business planning and budgeting or managers who control cost and budgeting for their departments or organizations or who are currently managing projects and/or contracts.
Whats wrong with traditional budgeting?
The one thing thats guaranteed about a budget is that it will be wrong. Many big companies such as Kevin's old employer, ICI,prepare budgets for the following calendar year in August or September. Even in January, month one of the year they are already out of date. By December they are irrelevant because things have moved on.

The modern business world is moving fast. Events come along that are real game changers. This year we've seen a BREXIT vote and a US election result that went the opposite way to what many predicted. The consequence of each will be disruptive change. The timing, consequences, and extent of the change remains uncertain.

We've also seen the arrival of new business models in a number of markets and seen these new models completely change the way business is done. Uber have disrupted the taxi marketplace. The rise of Amazon and other big online retailers has completely reshaped the high street. Technology is advancing at an ever faster rate and opening new possibilities every day. The one thing thats certain is that disruption is here to stay and we will see more and more of it.

The time frame of the traditional annual budget cycle simply doesn't lend itself to the uncertainties of the modern business landscape, and we need something else that is much more flexible.
So, what do you teach in budgeting and cost control for managers to address this?
We look at the whole approach to "Blowing up the Budget". You can't take the budget process and change it in isolation to everything else. Budgeting and forecasting must align with business strategy & business plans

The first thing we do is look at the whole planning & control framework, and understand how business strategy translates into plans and targets. We then look at how to set these targets, review them and revise them as things change. The targets can be both financial and non financial, and the financial ones will be the ones that inform the "budget" in whatever form that takes.

We look at replacing budgets with rolling forecasts. In essence this means every month or every quarter you review your forecast for the next 12 months. So if you do this quarterly, you monitor your performance against the first 3 months of the forecast. At the end of the quarter you review, revise the remaining 9 months of the forecast and add on a further 3 months. This means you always have a 12 month forward view. Rolling forecasts work well with our "next 100 days" concept, because they recognise that the only period you really have control of is the immediate quarter in front of you, and the further out you project the more your plan turns into an aspiration.
Challenging budget proposals
Being able to robustly challenge (or conversely robustly justify to others) spending proposals is a key part of every senior managers toolkit. To do this we take a good look at Zero Based Budgeting (ZBB). ZBB is the foundation stone of nearly all cost reduction techniques. Many traditional budgets are based on the budget in the previous year and adjusting by a % for inflation, wage increases and so on. If you let this continue, you get fat in your budget and you lose the link between spending and the business plan. In ZBB every item of spend is reviewed,

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