A Powerful Tool for Enhancing Fiscal Responsibility

May 28, 2024

By Dr. Bill Brantley, President and Chief Learning Officer for BAS2A, an instructional design consultancy for state and local governments

Government officials who work on finance and budgeting must deal with the difficult task of distributing scarce resources among many urgent needs while ensuring transparency, accountability, and fiscal sustainability. Enter the Risk, Assumptions, Issues, and Dependencies (RAID) Log, which is a tool used to systematically identify, evaluate, and reduce financial risks and uncertainties that can – and often do – crop up during an ongoing project. The tool can be extremely helpful for financial managers and budgeting officials throughout state and local government.

RAID Logs are not hard to make. Managers can use Microsoft Word, Microsoft Excel, Google Sheets, or even paper and pen, to make the tables and columns that form a RAID Log. Separate worksheets for risks, assumptions, issues, and dependencies provide additional information, with columns that record description, status, and owner information, with attention to creation and resolution dates, and space for additional notes.

More columns can be added if needed, of course.

Breaking up the Acryonym that creates the word RAID

• Risks are possible events or situations that could hurt a government entity's financial situation. Early detection of fiscal risks allows for the creation of mitigation plans to avoid budget excesses or deficits.
• Assumptions are the basic ideas that budget forecasts and plans rely on. Regular verification of these assumptions is essential to ensure the validity and dependability of budget estimates.
• Issues represent current financial problems or differences that need immediate attention. Quickly resolving issues preserves the quality of the budgeting process and prevents fiscal misalignments.
• Dependencies emphasize the connections and conditions between budget items, revenue sources, and funding distributions. Comprehending these dependencies is vital for precise financial planning and execution.

How a RAID Log Can Help to Manage a Budget Crisis

The state budget office calls a meeting to discuss the substantial budget excesses in the current infrastructure projects. The people who will attend the meeting are the State Budget Director, people from the Department of Transportation, project managers, financial analysts, and members of the legislative budget committee.

The Budget Office creates a new RAID Log with entries for the infrastructure projects before the meeting. This document has initial information on known risks, estimated cost baselines, current issues increasing budget costs, and dependencies on other state-funded initiatives.

The meeting begins with the State Budget Director, who sets the agenda. The group goes over the risks that have been identified, such as increasing material costs and possible labor shortages, that could worsen the project budgets. The group discusses how likely each risk is and how much money it could cost.

Financial analysts show the initial project budget's premises, such as anticipated schedules and material expenses. Project managers explain the current problems that cause budget excesses, including setbacks due to licensing issues and unforeseen environmental remediation costs. The discussion includes dependencies among projects, such as common resources or synchronized schedules, and how these impact budget distributions and project deadlines.

For each significant risk and issue, the group brainstorms potential mitigation strategies. For example, they might consider renegotiating contracts, seeking additional funding, or reprioritizing project elements. The team discusses revising the assumptions based on current data and potential future scenarios. For instance, they might adjust timelines or budget contingencies based on more realistic cost estimates.

Each problem is given an action item with specific roles and timelines. For example, a group might find ways to fund or save money. The meeting evaluates how the budget issues can be solved without affecting other related projects and the state's overall budget. These considerations ensure the problems are not mistakenly moved to another part of the state's portfolio.

The State Budget Director reports the meeting results, including the action items agreed on and the people handling each one. The director stresses the need for regular communication and RAID Log updates. The director schedules the next review meeting to ensure everyone is accountable and progressing.

Following the meeting, the updated RAID Log, a summary of decisions, and assigned action items are distributed to all participants and relevant stakeholders. Regular follow-up meetings are scheduled to monitor progress, update the RAID Log as necessary, and ensure budget issues are effectively addressed and resolved.

The RAID Log is a structured tool that can help state government officials deal with and reduce the budget excesses that affect essential infrastructure projects. By pinpointing specific risks, questioning assumptions, solving current problems, and knowing the project dependencies, the team creates a clear plan to put the projects back on budget while reducing the effects on other state goals. This cooperative and open method improves financial accountability and ensures that state resources are used well.

The RAID Log as a Strategic Framework

The RAID Log is not just a tool but a strategic framework that can significantly improve fiscal management and accountability when used well for government budgeting. By regularly finding, examining, and resolving financial risks, assumptions, issues, and dependencies, government finance officials can better manage budgeting challenges, ensuring resources are distributed effectively and ethically to benefit the public good. Ultimately, the RAID Log supports a culture of active fiscal planning, ongoing enhancement, and fiscal responsibility in government finance.

The contents of this blog post reflect those of the authors, and not necessarily those of the GFRC.