Monitoring and evaluating results is a key aspect of all the work we do. To understand if the results produced by our actions reflect our objectives.

Many people confuse outputs and outcomes.

An understanding how your organisation uses inputs (financial, human and other capitals) to deliver outputs (products or services delivered via processes from inputs) which translate to outcomes (effect of your outputs) is key to evaluating success. By doing so you understand the impact of your actions - your effectiveness.

An example of an outcome is customer satisfaction. Customer satisfaction is not produced but it is the result of a number of outputs. Outcomes are about “shifting the dial” on key metrics.

Understand the distinction between outputs and outcomes is a key aspect in determining value for money. This model demonstrates the linkages between inputs, outputs and outcomes and how they contribute to the 3 E’s of value for money.

The next time you are developing a budget or business plan or are evaluating your results a good first step is to outline how your business uses resources to deliver on outcomes.

Do you use excel regularly? Are you comfortable that it is delivering the right result? Much has been written about the accuracy of excel or should that be the inaccuracy.

A financial model is a key decision-making tool. It is at the heart of a business case. To get it right requires having good practice and methodologies. Excel is a great tool. Used correctly it can help you make the right decisions.

Models should solve complex problems in a simple manner

There should never be complexity in modelling. It may be used to solve a complex problem but developed correctly anyone should be able to understand what the model does.

If the model is too complex there is a high-risk something goes wrong.

Where do people go wrong?

There are many reported instances of errors made in financial models. One of the most reported was at Harvard University when a spreadsheet with debt to GDP ratios was found to be wrong. It was part of flawed research which some European countries relied on for their austerity measures.

In another example, the UK government miscalculated the costs of the procurement process for a rail franchise. The error was GBP 50m over the life of the contract.

While errors can still exist having a structured process to modelling reduces the risk of error.

So how can you get it right with excel?

Have the right standard and process

Have the right skills

Have the right tools

Excel is a great tool. It can help with distilling complex situations and provide deep insight to enable the right decision to be made.

Financial modelling as a service

In order to make the right decision, you need the right approach. We can design and build robust, reliable models which meet your needs. We can also review existing models and make sure the calculations are correct.

We have experience with financial models in the following areas:

Business planning, forecasting, budgetInvestment/business case analysisPricing and costing analysisProject financialsReporting, dashboardsTotal cost of ownership

How long does your month end process take? If the answer is ‘too long’, here are some tips for speeding things up.

How long does your month end process take you? Five days? Ten days? Longer?

And more importantly, what’s the impact of that, for you, your team, and your business?

You never have enough time for analysis, insight and business improvement. Your finance team are perpetually exhausted from the monthly reporting marathon. Your colleagues worry that they can’t make the right decisions because data isn’t available when they need it.

What if there was a better way?

Taking month end from 12 days to 3 days

A long time ago - over ten years now - I was working with a senior team who faced those same issues. They firmly believed that month end had to take 12 days. Any less would mean the accounts might be inaccurate. There would be issues with external reporting to third parties. Etc. Etc…

I know there's a better way. I'm 100% with David Parmenter on this issue: completing your financial close in days rather than weeks is possible for any organisation. If you've not come across David's work on improving the effectiveness of your finance function, I recommend you check out his books, toolkits and courses.

To convince my client that three-day reporting was possible, I took the whole group along to one of David's seminars. He showed how to cut out wasteful practices, improve reporting, and STILL produce good quality data - in just three days.

I am somewhat evangelical about this approach, but that’s because I’ve seen the difference it makes. As the Chief Executive put it, he’d much rather know if the organisation was on track after three days, than have perfect accounts in a fortnight. Wouldn’t you?

Tips for speeding up your own month end

Since that workshop with David Parmenter, I’ve helped many organisations cut their financial close down to size. Here are some tactics I use all the time, that you can try in your own organisation.

Every journal is waste. Review every journal and go back to the source systems – revenue, accounts payable, payroll and fix the source information.Good enough is good enough. Focus on what's essential to your organisation. Use the 80:20 rule and challenge every aspect of the process to make sure it’s adding value. Yes, there may be changes later - but don’t hold up the big picture because you haven’t filled in a few tiny details.Simplify reporting to focus on exceptions. If it’s on track, don’t waste time telling someone it is. Rework reports so that it’s obvious which numbers need attention.Compare the right things. Focus on year to date results and comparison to last year, not to the budget. Management accountants have a whole industry around explaining variances to budget. Often a budget that isn’t phased correctly anyway. It adds no value.Nominate champions You will meet resistance, and you’ll need buy-in from the team. If you can convince the real sceptics, they tend to bring the rest of the team with them. So make them part of the process: push "poisoners" into the well by giving them specific tasks and holding them to account.

Still think it can’t be done?

I’ve recently been working in healthcare shared services. The financial processing components were completed in just two days, and the shared services accounts were delivered in three days. The customer took 12 days to produce their month-end reports – as that was the reporting deadline to the Ministry. What a waste!

We’re now helping one of these customers to challenge the status quo. I've successfully implemented three-day month ends for many organisations - in just 90 days. Trust me. It can be done.

If you need some help to streamline your month end, get in touch with me ross.chirnside@efficacygroup.co.nz

Twenty-Five years ago I completed the dissertation for my honours degree in Accountancy.

Little did I know that my interest in public sector finances would be of benefit some many years later.My dissertation was titled “Value for Money auditing by the National Audit Office: Does it deliver value?”

Fast forward to 2018 and I am the lead analyst on Auckland Councils value for money programme.

In a New Zealand context, the Council is a significant organisation employing over 10,000 staff, annual revenue of $3.2bn and a capital programme of $25bn over the next 10 years.Auckland is also suffering growing pains with infrastructure not keeping pace with population growth and a mayor who was elected on a low rates increase and value for money proposition.

The Local Government Act requires Councils to assess the cost-effectiveness of their services every 6 years but Auckland Council has gone a stage further to develop a comprehensive value for money programme. Our work does not just consider cost-effectiveness but also equity, environmental, cultural and community value. The programme is a key activity in the council strategic pillar of "making size work".

Gathering evidence from a variety of sources, including international best practice and leveraging the better business case framework value is assessed from an economic, environmental, social and cultural perspective. Effectively using a complete benefits assessment.While the past provides indicators of future performance our reviews are very much forward focused and look at how services could be delivered differently (from a governance, funding and service delivery perspective) in the future and could further value be delivered to the citizens of Auckland.

To date, 6 services have been reviewed across the council group and value opportunities of over $500m have been identified over the next 10 years. As part of the review, management receives a high level implementation plan to assist in quick benefit realisation.

When I reflect on this I never dreamt that what I wrote about all those years ago would be delivering value. And yes, I found the National Audit Office was delivering value as the current programme at Auckland Council is now.

The Government have $1bn a year for the next 3 years to invest in provincial New Zealand. This fund represents a huge opportunity for Local Authorities to secure additional funding to assist in the development of local infrastructure.

As the Long Term Plan consultation process nears completion and the overall affordability to the community is assessed the Provincial Growth Fund may provide an additional source of funding over the next 3 years.

There are 3 investment tiers:

Regional projects and capability. This is to provide support to initiatives for economic development, feasibility studies and capability buildingSector investment (includes one billion trees programme). This is for investment in initaitives targeted as priority or high value in terms of economic developmentEnabling infrastructure projects. This is for investment in regional infrastructure that will lift productivity and grow jobs.

The Government has made a significant financial commitment and for their success projects need to be delivered.

Unlike some other funds there are no formal funding rounds and applications can be accepted at any time. The Independent Advisory Panel that has been formed to provide advice to the respective ministers.

As the complexity, risk and level of investment increases the time and complexity of the application process also increases.

We can assist by working with you to develop your investment proposition and then complete the application, feasibility studies, business cases to increase the chances of funding success.

A useful summary is available: