Preventing Scope Creep in Financial Modeling
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What is a Project Scope?
Scope refers to the objectives of a project and the goals that need to be met to achieve the specified result. More importantly, the scope defines what you would not do in the project. These attributes also apply to the process of building a forecasting model; it’s crucial to define the model’s requirements, intended use, and audience at the outset of the project.
What is Scope Creep and How Can it be Avoided?
Scope creep is continuous or unscheduled growth beyond the agreed-upon confines of the model, which can lead to inefficientunusable forecasts. Often, a scope becomes too large because users or stakeholders expand or redefine it throughout the process of building a model. While these changes may seem innocent, they can add up and contribute to an overall unwieldy scope, inhibiting decision-making and stifling strategic discussions. It’s inevitable that modifications to the original goals and objectives will occur; however, minimizing scope creep helps avoid a cumbersome and unmanageable model.
Creating a well-defined scope at the outset of a project will help set expectations and ensure stakeholders are involved in the process. Additionally, considering the resource capacity and limitations of those building and managing the model will help identify the appropriate level of complexity, helping to ensure an attainable scope.