Regularly reviewing your budget against actual spending is crucial for effective financial stewardship. This process helps you identify deviations, make informed decisions, and keep your engineering organization on track.
Data Collection & Preparation
Gather actual expenditure reports and approved budget figures for the period. Consolidate and format data for easy analysis.
- Source actuals data from finance/accounting systems.
- Retrieve approved budget figures.
- Consolidate and format data.
Comparison & Variance Analysis
Compare actuals against budget line-by-line. Calculate absolute and percentage variances. Identify significant deviations using predefined thresholds.
- Compare actuals vs. budget.
- Calculate absolute and percentage variances.
- Identify significant variances (e.g., >5% or $X).
Root Cause Investigation
For each significant variance, drill down to understand *why* it occurred. Engage relevant engineering managers and stakeholders for context.
- Investigate reasons for over/under-spend.
- Consult with engineering managers and leads.
- Document findings clearly.
Forecasting Adjustment & Impact Assessment
Adjust your financial forecast for the remainder of the period based on actual performance. Project the potential year-end outcome and assess strategic implications.
- Update future forecasts.
- Project year-end outcome.
- Assess impact on strategic goals.
Reporting & Communication
Prepare concise reports for internal engineering teams, finance, and executive leadership. Highlight key variances, explanations, and proposed actions.
- Report to engineering leadership.
- Report to finance/executives.
- Focus on key variances and actions.
Action Planning & Follow-up
Develop concrete action plans for identified issues or opportunities. Assign ownership, set deadlines, and monitor progress to ensure accountability.
- Develop concrete action plans.
- Assign ownership and deadlines.
- Monitor progress and refine process.