From our archive
First posted in 2009, and still accurate today. For a newer take on model quality, see can Claude replace a financial model audit.
After a first review of a client’s financial model, our team often asks: what do you think of the model? The answer usually covers structure, formatting, scenarios, flexibility, complexity, level of detail, accuracy, usability, timing, size, number of authors, external links, industry conventions, acronyms and VBA macros. Each one shapes how hard the model will be to audit.
A reasonably detailed description takes 5 to 10 minutes. I had an idea for a shorter, and arguably more entertaining (or controversial), way to have the same conversation.
Describing a financial model as a city
Most people have a view of what a city is like, even one they have never visited. Ask someone to describe a city in less than a minute and you get a picture fast.
So imagine your financial model is a city, and find the city that describes it best. There are some cities you definitely don’t want your model described as. (Yes, these are superficial stereotypes. Don’t take it personally if you live there.)
Cities you don’t want your model to be
New York, USA
“A compact, heavy financial model with a lot of attitude and big bold formulas.”
Berlin (before 1989), Germany
“The financial model has been built by two different modellers, with a minimum of interaction and zero integration. One half has a strong structural integrity and the other half excels in creativity and beautiful formatting.”
Dubai, UAE
“A very promising model that didn’t quite get completed because the financial modeller moved on to a better job.”
Paris, France
“A financial model full of love and care, with formulas like romantic poetry that you could show to your loved one over a glass of red wine. You enjoy spending day after day finding your way around the small alleyways, and you keep finding new treasures and secrets.”
Stockholm, Sweden
“A minimalist formatted financial model where all cells are of equal importance and no sheet stands out as more important than the others. Beautifully prepared, though it lacks the confidence to recommend the transaction or investment as it is waiting for consensus.”
Sydney, Australia
“On a good day one of the most beautifully constructed financial models in the world, but when stressed the infrastructure breaks down and critical functions stop working.”
The Paris description was inspired by Chris McNeill at PwC Sydney.
Cities you would like your model to be
This is a lot harder. Perhaps these:
Canberra, Australia
“Oversized infrastructure and sparsely populated makes the financial model ready for growth, and it is easily navigated. Working on a ‘no surprises’ approach.”
Kuala Lumpur, Malaysia
“Well structured with strong infrastructure, while still keeping a level of interesting dynamics.”
Geneva, Switzerland
“Clean, comfortable and efficient.”
Reader contributions
Readers of the original 2009 post sent in their own suggestions. The contributors’ names were lost when the blog moved to a new platform.
Jakarta
“What would have been a financial model built with earlier spreadsheet software (Quattro Pro, Lotus 1‑2‑3) was then imported into Excel. The original purpose of the model has been lost, and further development was a mere add‑on to meet the needs of many different users with different agendas in mind, lacking integration. Just like the transformation from Batavia to Jakarta, the city built more than 400 years ago as a colonial trading post that became a capital city.”
Boston
“Could be the symbol for a perfect financial model. Well planned, presents well, safe to move around in, welcomes new visitors, has evolved well and large infrastructure changes (the Big Dig) are possible. Easily accessible and less boring than Canberra.”
Milton Keynes
“A sub‑model that had to be built because the main model just got too big and clunky to include everything. But the designer just didn’t get it quite right. People don’t like using it, but once they are in the model they can’t seem to find their way out. The model should really be rebuilt, but the budget has been blown and the designer has to resort to putting lipstick on a pig.”
Venice
“A fantastic model of its time, developed by the boss in VisiCalc (when they were good at programming) and upgraded over the decades. It was well conceived and people like using it, but now it’s a bit old, starting to stink and can’t quite keep its head above water as it struggles to cope with all the demands of new technology. It really should be upgraded, but the boss won’t let anyone touch their masterpiece.”
Pompeii
“Looks nice, people like using it, but a bit unstable: prone to blue screens and going bang.”
Dublin
“I guess it would be user‑friendly but poorly formatted and dull.”