Budgeting and actual-cost models
We build models that estimate the costs, revenues and resources of each order or period in advance, and compare them with what actually happened: more precise planning and fewer surprises.
The starting point
Inaccurate estimates and late actuals erode margins unnoticed. A structured estimating and reporting system makes variances visible, explains their causes and, forecast after forecast, improves the company's ability to plan.
What the company gains
- More precise cost forecasting and control
- More accurate planning, order after order
- Fewer manual errors and more time for analysis
- Fast decisions based on real data
The process
How the engagement works
- 01
Review of past data
We start from past quotes and actuals to understand where and why variances arise: time, materials, subcontracted work, overheads.
- 02
Estimating model
We build a structured, repeatable model to estimate the costs, revenues and resources of each order or period, based on measured parameters rather than experience alone.
- 03
Actual-cost model
We define how to collect actual data with as little manual work as possible, linked to the systems already in use, and how to compare it with the estimate.
- 04
Variance analysis
We set up a regular cycle comparing planned and actual figures: every variance becomes information that improves the next forecast.
Signs it is the right time
- Quotes rely on one person's experience and are hard to verify
- The actual cost of an order arrives late, or never
- Orders that look profitable close with lower margins than expected
- The annual budget is not compared with results during the year
- Variances are discovered when it is too late to act
What the company keeps
- Estimating model by order or by period
- Procedure for collecting actual data
- Estimate-versus-actual comparison reports
- Annual budget with periodic revisions
- Updated cost parameters to use in quotations
Frequently asked questions
Does it suit both make-to-order and series production?
Yes. For make-to-order companies the comparison is made order by order; for series production it is made by period, product or line. The principle is the same: forecast, measure, correct.
Our data is scattered and incomplete. Can we still start?
Yes. The first phase exists precisely to understand what data there is and how reliable it is. The model is built on what exists and improves as data collection becomes more structured.
How does this relate to management control?
Estimating and actual costing are part of management control, focused on the single order or period. The two engagements are often carried out together.
Let's talk about your company.
An initial, confidential and no-obligation conversation to understand where your organisation stands today and where it can go.