Do you know why skilled pilots still use preflight checklists? The answer is simple: Even the most experienced pilots know they can forget a critical aspect of their routine. That’s why they utilize a systematic process: It helps to ensure that they remember to check crucial issues before takeoff.
Likewise, even the most experienced construction executives can forget important aspects of budgeting preparation. To prevent the omission of a critical element that could devastate your budget, consider utilizing this budget checklist that we present here.
Seven Major Categories of Concern
For your convenience, we have grouped the budget checklist questions into seven major categories of concern during budget creation. Those major categories are as follows:
- Realistic Growth
- Data-Driven Assumptions
- Stakeholder Collaboration
- Plan-B Creation
- Strategic Alignment
- User Friendliness
- Clear Communications
A deficiency in any of those areas could lead to an unsuccessful budget implementation. Each category relates to different people within your organization who must participate in the budgeting process.
The purpose of the checklist is to focus management’s attention on the areas that require more coordination before the budget is finalized.
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Deeper Consideration, Immediate Attention
Any checklist questions that elicit a “no” response could indicate an area that requires deeper consideration — and perhaps immediate attention — as you prepare your coming year’s budget. It’s likely that even the most experienced budget preparers will have some “no” answers on their checklist.
A second, and equally important, objective of using the checklist is to teach the operations team what issues they should consider when they draft budgets. The checklist can be a powerful conduit for learning. Managers are given the opportunity to present their opinions on the best way to rectify issues that arise from their checklist responses.
Critical Data
Still another byproduct of using the checklist system is gaining the opportunity to alert owners of areas where their current financial systems fail to produce sufficient critical data to complete the checklist adequately. If someone responds “no” to a question due to a lack of data, it’s time to consider the risks associated with not capturing this vital information.
Does a pilot’s preflight checklist ensure a flawless flight? No. However, the checklist is still a prudent process to follow, and it helps to avoid preventable errors. Will the use of this budget-preparation checklist ensure that a prudent and achievable budget is always drafted? No. But it definitely helps.
Editor’s Note: This piece was originally published on March 12, 2024 and has been updated as of March 18, 2024.
Eric Morris is CFO at NSCA member company Wayne Automatic Fire Sprinklers Inc. He is also a member of the NSCA Financial Leadership Council. To learn about becoming an NSCA member, visit NSCA.org.
