Driver-based Modeling Driver-based modeling presents major advantages when budgeting, forecasting, and running scenario analysis. A driver-based model allows you to test out individual assumptions and see how minor (or major) changes may affect your business. Further, a driver-based model allows for more detailed variance analysis and dynamic forecasting. For instance, if you are a hotelier and your hotel’s occupancy changes, then you would expect variable expenses such as housekeeping to change. A great driver of expense in this scenario would be rooms occupied. If your occupancy changes, then the difference in rooms occupied times the cost per housekeeping clean is the amount of variance you would expect to see at month-end. How do you build a driver-based model? First, identify the cost and revenue drivers in your business. What data can you get ahold of, and what impact does that data have on your business. While initial drivers may be statistics captured as part of your mont