CRaFT

CRaFT is SumProduct’s proprietary financial modelling ideology. Rather than adopt a 300-page document of Standards, we believe a good financial model should exhibit the following four key qualities:

• Consistency
• Robustness
• Flexibility
• Transparency

If a model meets these four key qualities, it should adhere to any professional standards sought. These four ideas are explored further below.

Consistency

• Ensures fewer mistakes, promotes model integrity and makes it easier for developers and users alike to understand models more quickly
• Assists the model developer by building structured models efficiently and effectively:
  • incorporating pre-defined formats and styles in a coherent manner
  • requiring formulae to be copied uniformly across ranges
  • presenting periodic data and formulae in columns consistently, thereby ensuring similar structures for similar worksheets

Robustness

• Models must be materially free from error, mathematically accurate and readily auditable
• Develop / review spreadsheets under a philosophy of keeping things simple, consistent and transparent
• Hence, models should provide strong, inherent levels of structural, logical and formula sturdiness
• Ideally, well-built models should contain:
  • no hidden macros
  • in-built error, sensitivity and alert checks
  • audited, established formulae

Flexibility

• Models should have the structure to provide invaluable “what if?” scenario / sensitivity analysis
• End users must be able to change key assumptions within agreed parameters

Transparency

• Many modellers often forget that key decision makers base their choices on printed material
• Models need to be clear, concise and cohesive
• Modellers should create assumptions, calculations and outputs that are recognisable instantly and user-friendly
• For example, the developer / reviewer should consider:
  • the logical flow and dynamic linking of the model
  • the number of categories required for particular calculations
  • the nature of the assumptions together with their assumption entry methods at the design stage