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What are the best practices for forecasting program expenses for long-term programs?

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Forecasting program expenses is a crucial skill for program coordinators, especially for long-term programs that span multiple years, phases, or locations. Accurate and realistic forecasts can help you plan, monitor, and adjust your program activities, resources, and outcomes. In this article, we will share some of the best practices for forecasting program expenses for long-term programs, based on our experience and industry standards.

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Mitesh Madhani

CPA US | CA India | MBA | Ex KPMG | Ex BDO | Auditor | Accountant | 6K+ followers | LinkedIn Top Voice

1 Define your program scope and objectives

Before you start forecasting your program expenses, you need to have a clear and detailed understanding of your program scope and objectives. What are the main goals, deliverables, and indicators of your program? How long will it last, and what are the major milestones and deadlines? Who are your target beneficiaries, partners, and stakeholders, and what are their roles and expectations? How will you measure and report your program results and impact? These questions will help you define the scope and objectives of your program, which will guide your forecasting process.

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Mitesh Madhani

CPA US | CA India | MBA | Ex KPMG | Ex BDO | Auditor | Accountant | 6K+ followers | LinkedIn Top Voice
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In preparing to forecast my program's long-term expenses, I focus on clearly defining its goals, expected outcomes, and the timeline for achievement. I determine the key performance indicators that will track our progress and take a deep dive into stakeholder expectations and roles. This detailed preparation is crucial as it anchors my financial projections to the program's strategic objectives, ensuring they remain flexible and accurate as the program evolves.

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2 Estimate your program activities and costs

Next, you need to estimate the costs of the activities that you will implement to achieve your program objectives. This includes both direct and indirect costs, such as staff salaries, travel expenses, equipment, materials, training, communication, evaluation, administration, and overhead. You can use various methods and tools to estimate your program costs, such as historical data, market research, unit costs, cost-benefit analysis, and budget templates. You should also consider the potential risks and uncertainties that may affect your program costs, such as inflation, exchange rates, political instability, natural disasters, or pandemic outbreaks, and include contingency funds or reserves in your forecast.

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Mitesh Madhani

CPA US | CA India | MBA | Ex KPMG | Ex BDO | Auditor | Accountant | 6K+ followers | LinkedIn Top Voice
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In forecasting long-term program expenses, I itemize all necessary activities and assign costs, using historical data and market research to inform my estimates. I calculate unit costs for scalability and include a contingency fund of 5-10% for unexpected expenses. Regularly, I revise these estimates, ensuring transparency by documenting all assumptions, to keep the program's financial planning accurate and reliable.

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3 Align your forecast with your funding sources and cycles

Another important factor to consider when forecasting your program expenses is the availability and timing of your funding sources and cycles. How much funding do you have or expect to secure for your program, and from whom? What are the terms and conditions of your funding agreements, such as reporting requirements, payment schedules, and restrictions? How often do you need to update or revise your forecast to align with your funding cycles? You should ensure that your forecast is consistent and compatible with your funding sources and cycles, and that you have enough cash flow to cover your program expenses throughout the program duration.

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4 Review and update your forecast regularly

Finally, you should review and update your forecast regularly to reflect the actual performance and progress of your program. You should compare your forecasted expenses with your actual expenses, and identify and explain any variances or deviations. You should also monitor the external factors that may influence your program costs, such as changes in the market, the environment, or the stakeholder needs. You should adjust your forecast accordingly, and communicate any changes or issues to your program team, funders, and other relevant parties.

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Mitesh Madhani

CPA US | CA India | MBA | Ex KPMG | Ex BDO | Auditor | Accountant | 6K+ followers | LinkedIn Top Voice
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In managing our long-term programs, I diligently review and update our financial forecasts on a regular schedule. I compare projected expenses with actuals, identify the causes of any variances, and adjust our forecasts to reflect new insights and external market or regulatory changes. I communicate these updates transparently to stakeholders and document the rationale behind adjustments. This process keeps our program financially on track and maintains trust with our partners.

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5 Use forecasting software or tools

Forecasting software or tools can make your forecasting process easier and more efficient by automating, organizing, and analyzing program expenses. There are many options available in the market, depending on your needs, preferences, and budget. Features to look for include integration with accounting, project management, or reporting systems; customization of budget categories, formats, and currencies; calculation of direct and indirect costs, overheads, and margins; scenario analysis and sensitivity testing of assumptions and risks; visualization and presentation of forecast data and trends; and collaboration and feedback from program team, funders, and stakeholders. Ultimately, using forecasting software or tools can save time, reduce errors, improve accuracy, and increase transparency in your forecasting process.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the best practices for forecasting program expenses for long-term programs?

1

2

3

4

5

6

1 Define your program scope and objectives

2 Estimate your program activities and costs

3 Align your forecast with your funding sources and cycles

4 Review and update your forecast regularly

5 Use forecasting software or tools

6 Here’s what else to consider

Program Coordination

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What are the best practices for forecasting program expenses for long-term programs?

1

2

3

4

5

6

1 Define your program scope and objectives

2 Estimate your program activities and costs

3 Align your forecast with your funding sources and cycles

4 Review and update your forecast regularly

5 Use forecasting software or tools

6 Here’s what else to consider

Program Coordination

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