Arcvue
Arcvue Scenario Planning
How to Build and Run a Scenario
Create what-if scenarios modeling revenue changes, contract wins and losses, and cost adjustments—then compare them side-by-side to stress test EBITDA, covenant compliance, and cash flow. Arcvue runs each one against your real debt schedule and the covenant thresholds in your agreement, so the assumption and the covenant it might breach are in one view.
Before You Start
- The Compute All button on the Dashboard must have been run at least once—this creates the Base Case from your current forecast data.
- Your contracts should have forecast data loaded (from Contract Forecasting or ERP sync).
- For contract win/loss scenarios, it helps to have pipeline opportunities entered.
Step 1—Navigate to Scenario Planning
From the main navigation, select Scenarios. The page itself is headed Scenario Planning and carries three tabs.
| Tab | Purpose |
|---|---|
| Scenarios | Create scenarios and add adjustments |
| Compare | Side-by-side scenario comparison |
| Covenants | Stress test covenant compliance across scenarios |
Screen the Scenario Planning page.
Step 2—Understand the Base Case
The Base Case is automatically created and marked with a star. It represents your current forecast with no adjustments—your P&L, EBITDA, debt service, and covenant metrics as they stand today.
You cannot edit the Base Case. It refreshes automatically when you run Compute All from the Dashboard. Every scenario you create is measured against it.
Step 3—Create a New Scenario
- Click the New Scenario expander on the Scenarios tab.
- Enter a name (e.g., “Downside—20% Revenue Loss”) and optional description.
- Click Create Scenario.
Arcvue assigns a color to the scenario for chart identification. You can create as many scenarios as you need.
Step 4—Add Adjustments
Each adjustment is a single lever that modifies one dimension of your financials. The levers are designed to not overlap—each touches a specific part of the P&L without affecting other levers.
Revenue Adjustments
Revenue % Change. Increases or decreases all revenue by a percentage. Direct costs, labor, and fringe cascade proportionally. Best for broad market changes (“Federal spending drops 15%”) or growth assumptions.
What cascades automatically: direct costs scale proportionally, direct labor scales with direct costs, fringe recalculates based on new labor base, bonus recalculates from the gross profit impact.
Revenue $ Change. Same as above but you enter a fixed dollar amount. Use when you have a specific dollar impact in mind (e.g., “−$2,000,000 from losing a specific task order”).
Labor & Cost Adjustments
Indirect Labor % Change. Changes indirect labor costs only (overhead staff, G&A staff, BD staff). Does not affect direct labor or revenue. Fringe recalculates based on the new indirect labor base. Use this to model headcount reductions in overhead, hiring freezes, or G&A expansion.
Indirect Non-Labor % Change. Changes non-labor, non-calculated indirect costs: facilities, indirect expenses, and unallowable costs. The percentage distributes proportionally across these three categories based on their base case ratio. This lever does NOT touch revenue, direct costs, labor, fringe, or bonus—those have their own levers. Use it for cost reduction initiatives (consolidating offices) or modeling higher costs (new office lease).
Fringe Rate Override. Replaces the base fringe rate with a new rate for this scenario. Use for sensitivity analysis on benefits costs, modeling a workforce mix shift, or testing the impact of a plan design change.
Bonus Pool $ Change. Directly sets the bonus pool change vs. the base case. This overrides the automatic bonus calculation. By default, when you change revenue, the system recalculates bonus from the GP impact. If you add a bonus override, your entered amount replaces that auto-calculation entirely.
Contract Adjustments
These are the most powerful levers because they’re time-aware—they prorate revenue and cost to the exact months that fall within each fiscal year.
Win a Contract. Two input modes. From Pipeline: select an existing pipeline opportunity—value, duration, and start date auto-populate. Manual Entry: enter contract name, ceiling, start date, duration, and expected GP margin.
Monthly Revenue = Ceiling / Duration (months)
FY Revenue = Monthly Revenue × Months Active in That FY
FY Cost = FY Revenue × (1 − Margin%)
A $1.2M contract over 18 months starting July 2025 at 30% GP does not land in one year. It lands in three, and the split is the whole point of the lever being time-aware.
| Fiscal year | Months | Revenue | Cost |
|---|---|---|---|
| FY2025 | 3 | 200,000.00 | 140,000.00 |
| FY2026 | 12 | 800,000.00 | 560,000.00 |
| FY2027 | 3 | 200,000.00 | 140,000.00 |
| Total | 18 | 1,200,000.00 | 840,000.00 |
Example a worked example at the stated ceiling, duration, and margin. Basis monthly revenue is the ceiling over 18 months; each fiscal year takes the months that actually fall inside it. Cost is revenue at 1 − the 30% margin. An example set. Illustrative figures, not a company’s.
Lose a Contract. Models losing one or more existing contracts. Revenue and cost are removed from the loss date forward using the contract’s actual forecast data.
- Select one or more contracts from the multi-select dropdown.
- For each contract, choose loss timing: End of PoP (uses the contract’s period of performance end date) or Specific Date (you pick the month).
Custom Net Income Adjustment. Adds or subtracts a dollar amount directly to net income—no P&L structure changes. Use for one-time items that don’t fit other categories: litigation settlements, asset disposals, executive bonuses outside the normal structure, or acquisition-related costs.
Step 5—The Non-Overlapping Design
| Lever | What It Touches | What It Leaves Alone |
|---|---|---|
| Revenue % / $ | Revenue, direct costs, direct labor, fringe (via labor), bonus (via GP) | Indirect labor, facilities, indirect expense |
| Indirect Labor % | Indirect labor, fringe (via IL labor base) | Revenue, direct costs, facilities, bonus |
| Indirect Non-Labor % | Facilities, indirect expense, unallowable | Revenue, labor, fringe, bonus |
| Bonus Override | Bonus pool only | Everything else |
| Fringe Rate Override | Fringe calculation rate | All dollar amounts directly |
| Contract Win/Loss | Revenue and cost (time-aware) | Indirect structure |
| Custom NI | Net income only | P&L structure |
Basis the adjustment engine’s lever definitions.
If you add both a 15% revenue increase and an 8% indirect cost reduction to the same scenario, the system processes them independently with no overlap and no double-counting.
Step 6—Compute the Scenario
Once your adjustments are configured, click Compute Scenario. The system loads the base case P&L, applies each adjustment in sequence, runs the fringe cascade, runs the LOC rebalancing waterfall, and computes covenant metrics.
Step 7—Compare Results
Switch to the Compare tab. Use the multi-select dropdown to choose scenarios. Select a fiscal year with the slider. Six metric tiles appear for each scenario.
| Metric | What It Tells You |
|---|---|
| Revenue | Total revenue—green delta = more revenue than base |
| Gross Profit | Revenue minus direct costs |
| Adj. EBITDA | The covenant numerator—earnings before interest, taxes, D&A |
| Net Income | Bottom line after all costs |
| DSCR | EBITDA / Annual Debt Service—higher is better; below 1.2x = covenant risk |
| Leverage | Funded Debt / Adj. EBITDA—lower is better; above 3.5x = covenant risk |
Screen the Compare tab.
Expand the P&L Comparison to see the full income statement line-by-line for each scenario side by side, with deltas from the base case. Expand EBITDA & Net Income Trends to see how the impact compounds or recovers over multiple years.
Understanding the LOC Rebalancing Waterfall
This runs automatically behind the scenes when you compute a scenario. When a scenario changes your net income, it changes your cash flow. The system runs a sequential year-by-year waterfall.
If cash clears the floor and the LOC carries a balance, the excess pays down the LOC—which gives a new LOC balance, a new funded debt figure, and a new leverage ratio.
Basis a worked example of the rebalancing waterfall. An example set. Illustrative figures, not a company’s.
Leverage changes in two ways in a downside scenario: EBITDA goes down (bad for leverage) AND funded debt goes up (more LOC drawn). This compounds the covenant impact. Year 1’s LOC balance becomes Year 2’s starting point.
Step 8—Stress Test Covenants
Switch to the Covenants tab. This is the executive decision-making view.
DSCR Table
Shows Debt Service Coverage Ratio for every scenario across every year, banded green at 1.50x and above, amber from 1.20x, and red below it. The cushion shown tells you how much EBITDA could drop before hitting the threshold.
Leverage Table
Funded Debt / Adj. EBITDA for every scenario. Inverted from DSCR—lower is better. Green at 2.63x and below, amber to 3.50x, red above it. The cushion shows how much additional debt you could absorb before breaching—useful when evaluating whether you can take on acquisition debt under each scenario.
Recommended Scenario Structures
| Scenario | Adjustments | Purpose |
|---|---|---|
| Base Case | None (auto) | Current plan |
| Upside | +15% revenue, +$500K bonus | Best case—all wins materialize |
| Downside | −20% revenue, −10% indirect non-labor, lose 1–2 contracts | Stress test—what breaks? |
Basis the recommended structures in this guide.
| Scenario | Adjustments | Purpose |
|---|---|---|
| Revenue Only | −15% revenue | Pure demand shock |
| Cost Only | −10% indirect non-labor, −8% indirect labor | Pure cost reduction |
| Contract Loss | Lose specific contract X | Single-event risk |
| Combined | All of the above | Compound stress |
Basis the recommended structures in this guide.
The Operator’s View
Arcvue has grown to offer a lot, but the original impetus for building it was simpler than it might appear. The ability to actually see your financial data—never mind visualize it—is a gap in almost every ERP on the market. Tools like Power BI and Tableau close the visualization gap, and they’re genuinely powerful. But even with a great implementation, you’re still left with a fundamental problem: a wealth of historical data and nothing but Excel to model what the future might look like.
That’s the gap Scenario Manager was built to close. Every change to a P&L or balance sheet has a ripple effect somewhere else—that’s the nature of business operations and accounting. Model a contract loss and you’re not just moving a revenue line. You’re touching direct labor, fringe, accounts receivable, wages payable, cash from operations. The list goes on, and Excel doesn’t chase it down for you.
We’ve lived through the 11PM Friday version of this problem—staring at a recompete submission due Monday, running mental math in the shower, ruminating on the downside without any real evidence to anchor to. We don’t want that for anyone. Go to Arcvue, model the contract loss, select the contract, and hit enter. You may not like what you see. But you can solve a known problem, or at least prepare for one. It’s the unknown that causes sleepless nights.