Budgeting in times of increased uncertainty: How rolling forecasts are used in a construction company facing an industrial crisis?

Abstract

This single-case study investigates the budgeting practices of a Finnish construction company, and the changes the company has made in those practices during the industrial crisis. Based on the empirical evidence received via one interview with the company’s business controller, the company was found to have a well-functioning budgeting approach: a flexible and continuous form of budgeting by an interactive use of rolling forecasts and scenario planning. The increased emphasis on the planning and control reasons to budget was seen in times of increased uncertainty as prior literature in management accounting research have discussed.

The industrial crisis did not change the institutionalized budgeting processes and practices since they are seen to be serving well in the company. However, similar to other research of management control and crisis, the control and planning function of budgeting, especially resource allocation, became more important in the times of increased uncertainty. The frequent and accurate forecasting has a crucial role on the company’s action plan formation, resource allocation and decision-making. In addition, the importance of cost management and control increased and was paid more attention on.