By Giles Male
For those of you unfortunate enough to have been within earshot when I start to talk enthusiastically about my spreadsheet work (we’re a rare breed I know…), you may be familiar with the phrase “FAST modelling”, “FAST standard”, or something similar.
“Everything I do is based on FAST principles” – is something I find myself saying to clients and colleagues repeatedly. Does this mean I’m tapping away at my keyboard at breakneck speed? Well, sometimes I suppose I am, but this is not the FAST I’m referring to.
FAST is a financial modelling standard which promotes a set of modelling (or spreadsheet design) principles. Essentially it is the way we go about building spreadsheets – with a particular focus on financial modelling. The FAST Standard itself is currently a 72 page document with a long list of individual modelling principles. At the heart of the Standard are the four key characteristics your model should exhibited if you follow the FAST methodology: Flexible, Appropriate, Structured and Transparent.
- Flexible: You should be able to quickly change key drivers and assumptions and know that the model’s integrity will remain intact.
- Appropriate: The level of accuracy and complexity of a model should be considered. Being as precise as possible is not always the best route to go down.
- Structured: Model layout across the workbook and individual worksheets should be consistent and well ordered. Timelines in particular should be standardised in terms of their position if it is built across multiple worksheets.
- Transparent: Simplicity and clarity are important. Avoid complex formulae wherever possible, break calculations down into separate steps, and structure your worksheets in a way that makes it easy for other users to follow your logic.
The Standard itself was created by a group of very experienced modellers who had a desire to see all spreadsheet users go about their work in the same simple, logical and structured way.
Huge steps forward have been made since the Standard was first published, but we still need more people to buy into this idea of a standardised approach. With enough momentum, we could find ourselves in a world where any spreadsheet user can pick up anyone else’s model and start to use and update it quickly with a high degree of confidence that its outputs can be relied upon and are free from material logical error.
If you have had the unenviable experience of using another person’s spreadsheet when it has not followed any particular set of modelling principles, I hope this idea of structure and standardisation sounds appealing.
For me, the FAST methodology adds real value to me on a regular basis when I find myself having to explain some part of my modelling logic to a client face to face. FAST makes it easy to trace back the assumptions and calculations behind each of the financial line items on your outputs. So if a Finance Director asks me to talk him or her through the cost of goods sold calculation logic, I can usually hit my CTRL + [ keys a couple of times and find myself at the COGS section of my calculations worksheet with consistent and structured calculation blocks ordered appropriately. It’s hard to quantify how much value is gained from always being able to quickly and confidently explain your logic to a client, but I’d say it’s almost priceless for the work we do.
Clarity Consultancy Services are signatories of the FAST Standard, and we regularly deliver FAST training to groups of finance professionals. For more information, please do not hesitate to contact us by visiting our website:
https://www.clarityconsultancyservices.co.uk/services/financial-modelling/the-fast-standard
