Smart in 60 seconds! Today: the target-actual comparison
A new episode of our series in "The Agency Blogger". Here we regularly explain the most important terms of agency controlling in a short and sweet, but practical manner. Today: the target-actual comparison.
The target-actual comparison is one of the most important instruments in controlling. How far the actual results deviate from the plan can only be determined when these two values are compared with each other. The target-actual comparison therefore helps with the evaluation and adjustment of revenue, projects and budgets. Deviations can be detected quickly in order to take countermeasures and to reduce them.
The target values - also known as plan values - are predicted and determined in advance based on experiences and, for example, market analyses. The actual values are then the costs, hours of work, etc. that actually accrue. Target and actual values therefore do not necessarily have to represent monetary variables (for example: revenue) - they may also be used to compare target hours from an employee with the actual number of hours worked. If the target values deviate from the actual values when compared with each other, the next step is to examine why this is the case. If the reason is known, corrective measures will be taken in the next step to get as close to the target values as possible. The target-actual analysis should be done on a regular, monthly or quarterly basis.
Agency software can be used to execute target-actual comparisons for all jobs and projects. The software delivers all key data for this with the press of a button.