* Produce something useful that will meet your needs
* Understand what we are modelling
* Involve the Users
* Don't produce a "Black box"

At FinancialModelling.com Ltd we never lose sight of the fact that a spreadsheet is only any good if it produces meaningful information that you can use.

We will discuss with you your requirements and produce a high level specification for the model (this details the objective of the model e.g. " to produce forecast financial statements for the project for 10 years", and some of the main foundations upon which the model structure is to be built. If appropriate we may produce a simple model outline so you can review prior to us starting the main model build.

During the model build process it is important that we are able to get a good understanding of your business and how the model is to be used in practice as this will shape the form of the model.

We build our models through an iterative process that allows us to continually refine and adapt the model as we go through the build process. One of the great strengths of Excel is the ability to dynamically develop a spreadsheet, to try something and then to either develop it further or to discard it then and there. In Software engineering terms this is often referred to as "dynamic prototyping".

We believe that this methodology is more flexible and responsive to business needs that the more rigid "software engineering" approach adopted by some practitioners who insist on a full blown model specification before even starting work on the model! Our experience is that it is very rare to be able to specify the model in as much detail as is needed at the beginning of the process. People respond better to having "real" outputs in front of them and it is often through attempting to model something that new insight or questions arise. It is therefore critical that the modeller is experienced and skilled enough to be able to confidently query assumptions and calculation logic. Converting complex business, contractual or technical relationships into an Excel spreadsheet requires a high level of skill and experience that few people possess.

No model can be built in isolation of its users. It is an advantage if the person who will use the model is very heavily involved in its development otherwise there is a great danger that the model will not meet your business objectives.

We recommend that a "Data Book" of assumptions is used through the model build process to track and control the inputs and assumptions (basis of calculations).

In most companies it is very common for the primary model user and developer to be the same person. This puts a lot of pressure on them and if the model build is time critical and/or it is a complex transaction then this will significantly increase the risk of errors. A good approach is for us to develop the model and for you to control the Data Book.

We don't see a spreadsheet model as a "black box". Rather we prefer a flexible, dynamic and collaborative approach where we work together to produce the best solution to your business needs. At the end of the process you need to "own" the model. You should be happy with what the model is telling you and be confident about using it going forward.

At the end of the process the Data Book will become the main documentation for the model (as supplemented by more detailed notes if applicable) and would most likely be required if the model is to be subject to review or audit.

Throughout the build process we will update you with regular drafts of the model and model outputs so that you can review, check and feedback any comments and changes.