Challenge

Over several years, the regulation of the operating budget across a Department had become inaccurate, unreliable and unsustainable. This led to significant financial duress, unsuitable allocation of budgets within the business, a strained relationship with the Department of Finance and significant risk to the operations of the Department itself. At the commencement of Callida’s engagement, the Department did not have a sufficient operating budget to fund their existing activities.

Solution

Callida recommended a Priority Based Budgeting approach to evaluate strategic policy objectives; the current operating environment and environmental risk; opportunities, and cost behaviours, including an evaluation of discretionary budget utilisation.  This allowed business to make better short-term decisions on resource allocation, whilst factoring in strategic results and outcomes for long-term budget decisions.

The Callida team worked directly to the Secretary and Chief Operating Officer to establish budget governance and processes, evaluate progress, and to advise and confer at decision points.

As a baseline exercise, Callida undertook a forecast to quantify current activities. This determined the Department’s actual financial position by identifying each business activity and its underlying cost drivers. This enabled the Callida team to precisely understand the breadth of activities across the Department so they could implement the Priority Based Budgeting approach. This process included recommendations on critical activities that needed to be funded, cost saving opportunities and identified the duplication of activities, or common activities which could be merged to create efficiency.

Outcome

Underpinned by the Departments cost drivers and strategic requirements, Callida successfully implemented a prioritised budget that fit within available funding and drove the reduction of costs to achieve efficiencies.

This approach facilitated a framework for ongoing reliable and accurate financial reporting, allowing informed discussion and decisions on variances and reprioritisation of activities. This reliability also allowed the Department to successfully lobby the Commonwealth for a funding rebase, increasing funding to sustainable levels. Ultimately, this engagemet gave our client control over their budget.

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