Overview
Castaway offers two ways to model growth or apply incremental changes to your forecast:
- Grow Line - applies a fixed percentage or dollar change within a single element. Best suited for quick, straightforward adjustments.
For guidance on the Grow Line function, refer to: Manually Entering Forecast Data in Elements
- Driver element - links a single Driver to one or more elements, meaning you only need to update the Driver values once and all linked elements update automatically. Changes can also vary month to month, making this the more flexible and dynamic option. This article covers this method.
Common Use Cases
| Use Case | Driver | Applied To |
|---|---|---|
| Inflation index | CPI or fixed inflation rate | Multiple cost lines simultaneously |
| Wage increases | Annual wage increase rate | All Wages elements |
| Headcount growth | Number of staff | Cost per head rate to calculate total wages |
| Variable interest rate | Monthly interest rate | Loan or facility elements |
| Price increase | Percentage rate from a specific month | Multiple revenue streams |
| Scenario modelling | Best, base and worst case values | Any linked elements across the entire forecast |
Example: Modelling an Inflation Index
Example: Modelling an Inflation Index
This example models a 2.5% inflation index applied to a Rent Expense of $15,000 per month.
Setting up the Driver
- Create a Driver element called 'Inflation'.
- Enter 1.025 as the decimal rate in the first month - this represents 100% plus a 2.5% increase.
- Right-click the first cell and select Fill Right - Current Year to populate the remaining months.
- Click Save and Close.
Setting up the Cost Element
- Create a Cost element called 'Rent Expense'.
- Change the Expense Method to Driver x Rate.
- Enter $15,000 as the Rate and fill right to forecast for the remainder of the year.
- Under Element Selector, link the Rent Expense element to the Inflation Driver element.
- Click OK to apply.
- Review the Rent Expense calculation to confirm it reflects the expected values.
To apply the same inflation index to other expense elements, repeat Steps 5 to 10 and link each element to the same Inflation Driver. If the inflation rate changes during the year, update the Driver values once and all linked elements will update automatically.
Using Actuals as the Base Value
This technique can also be used to forecast using historical data or actuals as the base value, with the Driver applying percentage adjustments on top. This is useful where you want your forecast to respond dynamically to actual performance rather than a fixed starting point.
If you need any assistance please contact our support team at: support@castawayforecasting.com