Reporting Scenarios using Offset

Posted on February 14th, 2012 in Excel Howtos , Financial Modeling , Learn Excel - 11 comments

Project Managers often report financial numbers to the management. In a dynamic world, these numbers are usually based on a lot of factors that may or may not be under your control. So the top management demands that the numbers be reported as per different economic scenarios – Optimistic, Normal or Pessimistic.

It is important to report and present the numbers in a usable format to the top management. They should be able to toggle the scenarios comfortably and see the results. Offset function comes to your rescue to ensure a great looking model with the flexibility of reporting multiple scenarios.

What is the offset function?

A few months back, I had written about the offset function and how it can be used to create flexible models. I had discussed at that point of time, why offset function is one of the most versatile functions and at the same point of time quite dangerous as well.

In this tutorial, we would see another usage (I feel simpler than last time!) of the offset function

If I were to borrow the signature of the function from my last post, the offset function reads something like: Offset( range, rows, columns, height, width )

offset function

I will use a similar example, but change the usage of the function a little bit!

offset example

So in the illustrated example, it starts from the C3 cell, moves 1 rows and 3 columns and then gives the value (15 in this case)!

This time Offset is NOT returning an array. It is returning a single value!

[Related: OFFSET, VLOOKUP & MATCH explained in simple words]

So how can this be useful?

The offset function can move the reference of the cell by n rows and m columns. That means that if I structure the sheet with different economic possibilities in different rows, I can always move the scenarios using offset function.

Scenarios

How was this achieved?

Step 1: The layout of the sheet helps me achieve this objective very easily. The first part of the sheet to select the scenarios is achieved using form controls

form controls

Step 2: The Scenarios are listed in sequential order, one after the other and the form control (combo box in this case) is linked to the name of the scenarios.

combo box

Step 3: Depending on the scenario selected, the index number of the selection changes. This number is fed into the growth rate and cost selection using the offset function.

scenario

Step 4: The model is linked to the selected scenario to report the P&L figures

profit and loss

 

As I told you, offset function is quite versatile in nature and can help you achieve a lot of flexibility in your model

Bonus Step

From your PM career you would have known that preparing a nice looking report as important (if not more) as generating correct results! In our scenario selection model, we highlight the selected scenario (the pink colored row) to give clarity to the end user. This is achieved using

Step A: A simple formula in conditional formatting and

conditional formatting

Step B: Then using the $ referencing intelligently.

$ referencing

What functions do you use in reporting?

I am sure that if you are generating flexible reports and dashboards for reporting, you would be using some interesting functions and tools in Excel. I use Offset, Index, Match, Indirect, Mod. Which ones do you use?

Templates to download

I have created a template for you, where the subheadings are given and you have to link the model! You can download the same from here. You can go through the case and fill in the yellow boxes. I also recommend that you try to create this structure on your own (so that you get a hang of what information is to be recorded).

Also you can download this filled template and check, if the information you recorded, matches mine or not!

Next Steps

Chandoo and I are running a course on Excel for Project Managers to share with you the various tools and techniques in Excel that can make you an awesome Project Manager. We comprehensively cover aspects related to Planning, Tracking and Reporting apart from Basics of Finance and Advanced Techniques like Monte Carlo Simulation in Project Management in the course. If you are interested in learning more about the course, you can click here.

For any queries regarding the using Excel for Project Management, feel free to put the comments in the blog or write an email to paramdeep@edupristine.com

Written by paramdeep@gmail.com
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11 Responses to “Reporting Scenarios using Offset”

  1. Meic Goodyear says:

    I tried to download the template but it's unreadable in Excel 2003 using the most up-do-date file conversion pack

  2. Clarity says:

    Thanks for a great post.

    Functions include those above plus SUMIFS and often Pivot Tables and Pivot Charts.

    I used a couple of scroll bars in a budget model I recently built allowing our client to vary Turnover and Admin costs and see the impact on net profit.

    I also put goal seek into two macros linked to buttons in the spreadsheet allowing the client to see the turnover required to break even and to acheive a specified Net Profit %.

    Myles

  3. Michal says:

    Thanks for a great tip as usual.

    Could you unveal what app do you use to record and publish such motion screenshots?

    Whanks!

  4. Sadia says:

    Hi Chandoo,

    What an amazing resource in the form of chandoo.org! Congratulations!

    I have been frequenting your website since a couples of days and I came across one of your articles " Reporting scenarios using offset". So, I decided to use that to create different scenarios for a financial model for two schools and see how different revenue levels impact my IRR.

    Now here's the problem.

    Unlike in your case, where the revenue is hard-coded for Year 1 and then grows by a constant growth rate, my revenue projections are elaborate and stem from estimated student numbers and tuition fee.

    In my case, all student numbers for all classes for each of the ten years forecasted are hard coded numbers. No growth rate has been applied in determining the numbers. This is because in reality student numbers can not grow continuously, as in certian key schooling years such as grade 5, grade and grade 8 many students leave the school. Besides the gorwth rate of new students in the initial years is very high almost 100% in year 1 and 50 % in year 2 and it tapers off towards the end of the years. Hence, a constant growth rate factor can not be applied.

    To be able to adjust my student enrolment numbers for all classes (KG1-12) in order to create different economic scenarios, I have to adjust all student enrolment (hard-coded) numbers. Since I don't have "constant growth rates" as an assumption,I don't have a single variable that I can play with. How can I create the scenarios?

    I also have to keep in mind that when I adjust the enrolment numbers in optimistic scenarios (say increase the student number by 20%, 30% of the orignial number each year) the adjusted enrolment number does not exceed the capacity of the school in that year. The school is expected to be built in a phased manner over 8 years.

    I would really appreciate if you can help me out with this!

    Thank you so much.

    Sadia

  5. arnab0711 says:

    Hi Chandoo,
    Its so nice,to see the versatility of excels functions,certain things I want you to discuss more are different form controls and activex controls,it will be of great use in analytical front.

  6. Ashish says:

    Thanks Chandoo For This Great Tips...

  7. asher says:

    thank you so much....this website is amazing....
    short poll:
    what is more efficient formula for the above mentioned use: "choose" or offset?
    what is better? combo box or drop down list?

  8. Silke Flink says:

    First, thank you for this post. I also use offset-function to create various scenarios for different financial modells. What I haven't figured out yet, and I hope you can help me with this, is how to create a summary of those scenarios (e.g. IRR for scenario1, IRR for scenario2, etc.) without copy&paste the results after having run a scenario.

    It would be great if you could suggest something as I am stuck...

    Thank you in advance

    Silke

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