11.6. Sensitivity Analyses
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Present the key results of a 'what-if' analysis based on "best" and "worst" case scenarios. As a general guide, be conservative even when presenting the "best" case.
When planning scenarios, take account of possible project start-up delays, sales volume shortfalls, lower price levels and higher costs. For example, what would be the financial outcome (or additional funding requirement) if sales volumes and prices are both 90% of targets but direct and overhead costs are each 110% of planned?
Indicate break-even points and explore the consequences of incrementing volumes, prices and costs (e.g. by 10%, 15%, 20% etc.). Only present high-level summaries – relegate the detailed calculations to appendices or retain them as working papers.
For help with financial projections, "what-ifs" and sensitivity analyses, see Financial Projections with Exl-Plan.
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