Go Deep With Due Diligence

The annual forecast/budget season arrives in every golf operation at various scheduled times in the year and with it comes another opportunity for the golf course superintendent to show his worth. Over the last 30 or so years, I have worked in the public, resort and private sectors of golf managing small and large budgets hosting everything from small local charity events to televised PGA/LPGA tournaments. This diverse experience has revealed three common and costly errors when it comes to forecasting a budget. They are statistical/mathematical errors, meteorological calculations and lack of due diligence.

Check your data
The first most common and costly error is perhaps the most preventable and that is the statistical or mathematical error. In the modern budgeting processes we have the benefit of incredible computing and comparative systems but they are only as good as the information that is loaded into the system. These errors range from not enough zero’s to not entering the correct hourly wage that multiplies by 20 employees on the year and even the dreaded mis-key that dropped the water/irrigation budget 10 percent with one key stroke.

These mistakes show instantly on smaller history-based budgets but can sometimes slide through the system, even larger budgets often show human error as approvals and multiple versions of the budget are created and shared. There is no substitute for a line by line review and the creation of comparative reports to track anomalies is also helpful. Master the financial documents preferred by your operation to minimize these common statistical/mathematical errors.

What’s the forecast?
The second most costly forecast/budget mistake occurs when the superintendent is asked to project line items that are severely impacted by meteorological calculations (weather events). This is tough because no one can predict the weather, yet we need exact counts for ice melt (or snow removal costs), irrigation use, utilities and the list goes on.

The expectations are that we hit the number every time. My advice is to use as much historical data (at least five comparable years) as you can then find and refer to multiple forecasts (short and long range) and always use correct verbiage in written or verbal critiques of the budget. Note* the mean of any equation is the result of a high or low equating a mean or average so if you pick the meteorological middle which seems correct you are actually going to miss either high or low most of the time. Weather moves in cycles that are not truly defined in days or months, so our best guess coupled with clear and frequent communication is the solution to this problem.

Stay aware of how weather is impacting the budget projections and communicate in real numbers. For example, “we have one week left in June and have had 60 percent of our projected rainfall to date and are 6 degrees warmer (daily highs 99 degrees and lows of 78 degrees) than average resulting in a 45 percent overage in irrigation water use/fees totaling $6,000 MTD reflecting a $500 savings YTD”. Make sure you communicate meteorological calculations/adjustments often to all stake holders. This also applies to heat and cold stress on equipment repair, turf and personnel, you cannot achieve the same productivity in 125+ degree heat index or -5 degree wind chill as you can at a temperate 75 degrees (we all can appreciate those mid-summer/winter labor meetings)! Persevere this too shall pass.

Deep Research
Due diligence plays a critical role in budget forecasting. The quality of the due diligence often determines the accuracy of the forecast/budget. The majority of superintendents do their forecasts in the third or fourth financial quarter following a busy golf season. This can lead to a bit of financial fatigue. It is often demonstrated in a failure to research deeper financial issues or seek help from other financial experts.

Everyone needs some help in due diligence from time to time while forecasting budget line items. Case in point, you see that the over-seed budget is too low for 2019 but you think that is a year away and maybe the seed crop will be amazing next year and the price will drop so you do not have the conversation with accounting or the general manager. Inevitably it comes time to order your over-seed and then the problem is as big as Oregon. Our Director of Finance once said, “Don’t defer, instead refer in writing and in person until someone addresses the situation. You are our expert”. Pretty good advice.

Superintendents are good at many things and we are by nature planners but generally we love the doing more than the planning. This forecast/budget season take some extra time, breathe and avoid the three most costly forecast/budget mistakes by remembering to double check each evolution of the budget for statistical accuracy, communicate the probability and status of meteorological calculations and committing to a high level of due diligence before signing off on next year’s budget.       

Anthony Williams, CGCS, is the director of golf course maintenance and landscaping at the Four Seasons Resort Club Dallas at Las Colinas in Irving, Texas.