A Budget Within 2% of Actual Can Still Be Worthless
A budget can land within 2% of actual and still be worthless.
That sounds wrong to most finance teams. Variance is the scorecard. Tight variance means we planned well.
It doesn't.
A budget hits its number easily when it was set so conservatively that nobody had to make a hard choice. No trade-off was argued. No initiative was killed. Nothing was genuinely at risk. The plan described what was going to happen anyway, and then it happened.
The reverse is also true. A budget can miss materially and still have been the right plan, because the business took a deliberate bet, the bet is explainable, and management responded when it moved.
So the test isn't accuracy. It's this:
Did the budget change a decision?
Did something get funded that otherwise wouldn't have been? Did something get killed? Did anyone have to argue?
If the answer is no across all three, the exercise documented the status quo and called it planning. Six weeks of the finance team's capacity, spent on a formatting job.
Accuracy is easy to measure, which is why it gets measured. It just isn't the thing that matters.
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