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Sensitivity checks explained using the CRaFT methodology.
When to use
Many modelers add checks as an afterthought. Basically, it is too late to create them then. While building a model, a developer knows what situation might break a formula. That is when a check should be created. When the issue is foremost in your mind, create the check there and then.
- Sensitivity checks: can alert you that the model’s outputs are being derived from inputs that are not deemed to be part of the base case. This can prevent erroneous decisions being made using the “wrong Best Case”.
- For example, scenario 1 is the base case, but in the figure below, they based all their savings on one of the other scenarios. When changed back to scenario 1, the base case, the savings went from around $50 million savings to about $5 million loss.
- If you are going to put alternative numbers in there, sensitivity checks help alert you that you not at the base case numbers, and you may not be getting the right result.
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