Practical Financial Modelling : A Guide to Current Practice

Chapter 5: Model Use

Introduction

The test of a good model is ultimately how the users respond to it. Back in Chapter 1 we recognised the need to engage with the users at the outset to find out exactly what their requirements are, and this may involve both discussion and iteration to refine the purpose and function of the model. We must also ensure that expectations are realistic and that the limitations of the model are known. The users must be able to comprehend how the model works but without getting overwhelmed with detail. As model developers we may be quite confident about examining a workings sheet that contains several hundred rows of code, or perusing the structure of the pro forma financial statements covered with telephone number-sized figures, but our users may not feel quite the same way. Have you ever watched someone looking at a model for the first time? See how long it is before they check their email, or their mobile phone, or fetch a glass of water, or engage in any other form of displacement activity before actually getting down to the task at hand.

The demonstration workbooks for this Chapter are in Chapter 5: Model Use folder on the CD-ROM.

Grouping and Outlining

Even a relatively simple model may contain many rows of detail which serve to distract or confuse (or intimidate) the user. Although it is possible to simply hide the appropriate rows, it is more helpful to allow the user to hide or expand the detail...

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