Using a forecasting toolset can help improve mining companies’ budget planning, enabling them to streamline and create efficient processes, says performance management specialist company Cortell director Greg Bogiages.

He adds, however, that a budgeting and forecasting toolset requires standardised reports to ensure high-accuracy forecasting.

Accurate forecasting enables mines to predict the impact of operational variations on financial resources and profitability more accurately and to receive advanced warnings of the impact that maintenance or expansion projects will have on future budgets. This will enable the companies to avoid cash crunches, wherein budgets are overallocated, and delays to projects owing to a lack of funds.

“In any mining organisation, budgeting and forecasting processes are complex and subject to several obstacles, including volatility regarding commodity prices, currency fluctuations and cost pressures with regard to labour and electricity, as well as long planning cycles.

“A lack of standardisation means that ‘what if’ predictions by mines, to investigate potential cost-saving, energy-saving or production measures, besides others, will not be sufficiently accurate to inform business strategy,” notes Bogiages.

Cortell advises companies on improving their budgeting and forecasting capabilities, but advises in general that mining companies balance complexity and detail against their forecasting requirements.

It further investigates the reporting standards at a company’s sites and advises on how to standardise reporting, based on the require- ments of the mining company, before implementing its system.

“Mining companies using a standardised reporting and forecasting system can, thus, do more accurate ‘gap analysis’ for future budgets to manage funds and maintain concise control over working capital.”

Further, Cortell also institutes rolling forecasts, allowing companies to forecast a year ahead of any given reporting period, not only up to the end of the company’s financial year. This improves budget and funding visibility for mining companies on a rolling year-long horizon and allows them to factor in possible influences and fluctuations with ‘what if’ scenarios, notes Bogiages.

Standardised budgeting, forecasting and reporting toolsets can also be used to identify waste or various underperforming assets, as standardised reporting enables mines to uniformly compare production and expenses at various sites, he adds.

“The forecasting toolset is independent of enterprise resource planning (ERP) systems, but integrates with these systems to gain data for budgeting and forecasting purposes,” says Bogiages.

Further, mines can also use the budgeting and forecasting system to interrogate specific criteria, such as fuel use, compared with production, and to identify variances across a company’s sites.

The toolset can also be used in the airlines and petroleum industries.

“A budgeting and forecasting toolset helps a company’s financial department spend less time in the ‘preparation’ while focusing more on the analysis of the information provided through reporting – which is its primary function – to add value to the effective management of a company,” concludes Bogiages.