Rolling Plans and Forecasts

Rolling Plans and Forecasts


What are they?

Practice

CIMA Official Terminology defines these as plans or budgets that are continuously updated by adding a further accounting period when the earliest accounting period has expired. A rolling forecast is continually updated, whereby each time actual results are reported, a further forecast period is added and intermediate period forecasts are updated.

Budgeting and forecasting can be viewed as part of the planning process, which looks into the future beyond the immediate timeframe. Planning is an attempt to shape the organisation’s future, while forecasting and budgeting aim to predict the value created and resources used in a specific period. Adopting a rolling approach helps to inform a more realistic and timely planning process.

Example of rolling forecast process
Rolling forecast
Source: 'Quarterly rolling planning - get it right the first time.' CIMA Insight, 2001.

What benefits does a rolling approach provide?

This approach reduces uncertainty in planning and forecasting. It allows flexibility where long-term costs and/or activities cannot be forecast accurately.

The rolling approach encourages a regular reassessment of plans at all levels within the organisation. It also allows the business to respond quickly to current events.

Questions to consider when implementing a rolling approach

  • Do we have the time and resources to prepare plans on a more frequent basis?
  • How can we get buy-in from the rest of the organisation?
Actions to take / Dos Actions to Avoid / Don'ts
  • Involve budget holders in changes to the planning process
  • Base your forecasting on the key drivers of the business. Should there be a major change with any of these drivers, management can be quickly informed of the impact and react accordingly
  • Don’t take a top-top approach – understand and work with the business at all levels
  • Avoid wasting time preparing detailed plans for the full year – focus mainly on the earliest period and make outline plans for subsequent periods

 

 

In practice:
Rolling Plans and Forecasts

  
 

Driving success at Southwest Airlines
(Beyond Budgeting Roundtable, 2013)

Southwest has been consistently profitable for over 30 years, and is the most cost efficient airline with the highest shareholder returns of its peer group. The focus is upon continuously improving performance and meeting customers’ needs, with service seen as a “way of life” rather than a technique.

Planning takes place at the front line. It is a continuous process based on 12-month rolling forecasts and quarterly plans within a clear strategic framework. Resources are made available monthly and quarterly based on these forecasts, meaning that action plans can be approved at any time through the year and implemented immediately.

Targets are set by each team within broad-based parameters and expectations. This enables innovative thinking and builds ownership and commitment at the local level.

  

 

Related and similar practices

  • Beyond budgeting

 

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