A recent article in the Financial Times highlights how the motor industry has adopted a modular approach to building cars.
Volkswagen believes that by standardising elements of the production line, and by using standard modules in vehicle construction, they can grow to become the world’s biggest car manufacturer.
This approach has won them awards for innovation and has shown other manufacturers and industries that taking a modular approach can increase efficiencies, save time and improve output.
How can this approach be applied to the world of financial modelling?
At F1F9 we take the same approach to building financial models. We have found that modularity is the key to modelling productivity, and standards are the key to modularity. Although no two modelling assignments are the same, there are plenty of elements in common. This means that a “plug and play” approach to modelling is possible – and beneficial. This makes FAST modelling very efficient.
For example, in a FAST modelling assignment, we at F1F9 can be confident of spending 80 per cent of the time on 20 per cent of the model – those parts of the model that really need our attention because they are highly specialised, innovative or particularly risky.
How is this efficiency possible?
Because FAST financial models are built with standards in mind. Models built with the FAST standard incorporate standard modules with ease – just like Volkswagen’s production line.
FAST models use links and calculation blocks to take standard modules and make the coding specific. That coding, in turn, is understandable and reusable elsewhere in the model. A modeller within F1F9 may expect to undertake very little blue sky modelling. Instead, there is a focus on recycling information and coding that has been used before. That leads to productivity gains and efficiency.
And it is all made possible through standards.
How do I find out more?
To get a better understanding of how the FAST standard makes it possible to build reusable, modular code in financial models, please take a look at our without obligation free course 31 days to better financial modelling. – This course will guide you through some key FAST principles and offer excellent tips that will help you improve your modelling immediately.
To learn more, our FAST financial modelling, and FAST project finance modelling courses both make extensive use of modular code sections that enable you construct models more easily, in less time, with fewer errors and with greater confidence.
I look forward to hearing your comments.