Budgeting, Forecasting and Planning In Uncertain Times

INTRODUCTION

Planning is something we all do, whether that is to go on holiday, prepare for retirement, or to simply buy a car. Without planning it is all too easy to get lost or waste resources that in hindsight would have been better placed elsewhere. The same is true for business and public sector governments. Planning is a critical management task because its outcome determines decisions and actions that not only affect future success, but it can also threaten an organisation’s very survival.

It does not matter which type of management philosophy you follow or the business guru you seek to emulate—all will emphasise that planning plays a key role in gaining success. The author and successful entrepreneur Jim Rohn once said, Either you run the day or the day runs you. He also said that if you don’t plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.

However, the problem is that the world in which we operate today is very different from what it was ten years ago. More significant is that the business environment, especially its increased volatility, is vastly different from when the major business planning methodologies and practices now in use today were developed.

Practices such as ‘Budgetary Control’ that seek to devolve decision making to departments was established back in the 1920s and written up in the book of the same name by James McKinsey, who later became the founder of the McKinsey consulting firm. Organisations ...