Schlagwort-Archive: Size

The fuel tank – the ideal metaphor for budget

Surprisingly, some everyday experiences do not reach the consciousness of certain people. Managers, who are responsible to administer the means, often live in a world of apparent abundance. They waste their energy into the extension of budgets instead of taking care for a more reasonable use. For those, the gasoline tank should be a helpful metaphor to better understand the budget.

Tank

A truck tank seizes approx. 900 liters. With an average consumption of 40 liters at 100, you can achieve a distance of 2000 km depending upon the landscape and cargo.

Managers have likewise a kind of tank – the budget. They must fulfill their tasks within the respective budget. In the absence of a reliable planning and an awkward distribution of the means, however, bottlenecks develop frequently. Then they try to substitute the limits with exaggerated expectations and requirements for the contractors, the employees and suppliers.

The analogy of the tank offers a good idea, why this does not work. The following aspects are likewise valid for the tank and the budget.

  • Size
    The size of the tank determines how much gasoline can be refueled. With a truck this can be easily about 1000 liters. This maximum filling determines the range. If more is used, then either a second tank has to be installed or refueled from time to time.
    The same is valid for the budget. Depending upon the task setting a manager receives a limited budget. It is used to pay employees, material, services etc. The annual budget should be large enough to realize the tasks. If it is not enough, the budget must be laid out bigger in advance, or in the current year additional budget must be requested and made available.
    In the two examples the size cannot be increased at will. This means that the availability of resources is never infinite.
  • Necessary consumption
    The consumption of a truck specifies how far it can drive. This varies strongly, dependent on the cargo, the traffic and the scenic conditions. Empirical values help to plan correctly.
    The consumption of the budget results from the project. Depending upon the structure of a project and/or the employment of external forces it costs more or less. The quality of planning is defined by the experience of the planners.
    The optimum use arises in both cases from an economical allocation in the really necessary places. Despite all thriftiness a minimum consumption is mandatory.
  • Economical investment
    The driver determines with his driving style the economical use of the fuel in the tank. Foot down to the ground and unnecessary braking’s burn more gasoline, than actually necessary.
    The managers and the employees together determine by their expenditures, how effectively the budget is used. Generous distribution and unnecessary double work increase the costs.
    By focusing on the essential the users have a large influence to use resources skillfully. In each case consumption cannot be reduced to zero by thriftiness.
  • Range
    The maximum range of a truck results from the size of the tank and consumption. The weight that has to be moved and the inclines of the landscape have an influence on this range.
    The budget is normally planned for one year. Although the monthly consumptions are fixed in advance, the budgets vary due to unexpected expenditures. They result from bad plans, unexpected additional costs and unrealizable savings.
    Due to the basic conditions the range cannot be increased without limit.

Even so resources are scarce in all areas, the handling of budgets is characterized by enormous boundlessness. The efforts concentrate more on the provision and procurement of budget, than on the correct assignment of the means.

Bottom line: The awareness of limited resources is the basis, in order to achieve a larger range with the smart application. The tank as conception could help one or the other to better understand the application of the own resources.

Showing figures smartly

More and more figures are nowadays created and used as the basis for decisions. This leads to the fact that one does not see the forest for the trees. Charts provide a way out. Unfortunately the users do not always consider the influence of the style of the presentation. This is amazing, since the acceptance of a message is reinforced by showing figures smartly.

Visualisierungen EXCEL scribble

Pure numbers do not always clearly convey the desired impression. Luckily most computers have nowadays MS-EXCEL with various business diagrams, like column, line, circle and bar charts etc. Graphical presentations are beneficial. Those charts add to the actual numerical value a graphical aspect: larger or smaller, rising or falling, more or less similar etc. This strengthens the desired statement. The following aspects should be considered.

  • Size
    If orders of magnitude, like quantity, length, performance etc. are presented and compared, the bar charts or bar graphs are recommended. Thus, the different values can be prepared with horizontal bars or vertical columns side by side. The choice of the range strengthens thereby the message. Ranking becomes visible through additional sorting. The number of values that might be presented should be adapted to the presentation: for projections 7plusminus2, for A4 formats not more than 40 per page.
  • Progressions
    Values that change over time are represented with the line diagram. Rising costs, employee fluctuation or changes of temperature can also be represented over very long periods. The line conveys intuitively the course of time from left to right. The number of visualized values is defined by the question, whether single values or general progressions are important.
  • Portions of a whole
    If you want to show the portions of a whole, the circle or pie chart is perfect. The total circle represents thereby the 100%. If you want to compare the portions of different wholeness’s, you can use stacked bar charts. Usually the described elements should not exceed
  • Correlations
    Scatter diagrams help showing patterns, in order to be able to recognize dependencies of values. Thus, the BCG matrix shows, based on a joint look at market growth versus market share, in which products you should invest or not. Additionally, scatter diagrams can be used, in order to identify unusual pairs of value that arise outside of the value cloud.

Bottom line: For various purposes specific representation types are best. Size comparisons are represented by column and bar charts. Courses of time are shown with line diagrams. Parts of a whole are prepared with circle or pie charts. Correlations become visible with scatter diagrams.