Sample Paper on Budgeting and Importance of what-if scenarios


Importance of what-if scenarios

Every global business or organization decision entails a certain degree of risk. This implies that effective or appropriate management of the risk can help a business to maintain its competitive advantage as well as recognize a significant growth. By analysing the what-if scenarios, a business will be prepared to understand the impacts of likely risks and adjust the risks related to budgeting (Tessun, 1997). A business will also be able to manage the budget risks either through making operational changes or handling the situation through the internal systems. Additionally, what-if scenarios analysis helps a business to identify its key drivers allowing the business to make effective financial decisions associated with the key drivers in order to maximize its performance. Moreover, it helps a business to understand the effect of various financial decisions.

Benefits and cost of what-if analysis

What-if analysis is a brainstorming technique that helps a business to determine how the projected performance is most likely to be affected with any adjustments or changes made of various project performance assumptions. What-if analysis helps a business to better and informed decisions based on any changes made on the project performance assumptions. It also helps a business to predict the outcome of its decisions (Bird & Zimmermann, 2012). The concept of what-if analysis basically gives a business a glimpse into the future and enables it to make faster decisions at a low cost.

How to determine range and timeline of what-if scenarios

To determine the range and timeline of what if scenarios, a business can use spreadsheet-based modelling. Due to the complex calculations involved, spreadsheet-based modelling helps a business to track and compare multiple scenarios in a short period. However, the spreadsheet model may be prone to manual error that can decrease the accuracy of the what-if scenarios analysis.



Bird, C., & Zimmermann, T. (2012, November). Assessing the Value of Branches with What-If Analysis. In Proceedings of the ACM SIGSOFT 20th International Symposium on the Foundations of Software Engineering (p. 45). ACM. Retrieved from

Tessun, F. (1997). Scenario Analysis and Early Warning Systems at Daimler‐Benz Aerospace. Competitive Intelligence Review, 8(4), 30-40. Retrieved from;2-E