Forecasting - Revision history

Joakimc: /* Data pattern classification */

2023-05-09T07:36:01Z

Data pattern classification

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	=== Data pattern classification ===		=== Data pattern classification ===
	[[File:ForecastingPatterns.jpg\|right\|thumb\|~~900px~~\|'''Figure 1:''' Plottet examples of trend, cycles, and seasonality. The visualisations contain random variation. The figure is inspired by ''Stevenson, William J., et al. Operations management. Boston: McMcGraw-Hill Irwin, 2007'']]		[[File:ForecastingPatterns.jpg\|right\|thumb\|700px\|'''Figure 1:''' Plottet examples of trend, cycles, and seasonality. The visualisations contain random variation. The figure is inspired by ''Stevenson, William J., et al. Operations management. Boston: McMcGraw-Hill Irwin, 2007'']]

	Before deciding on which quantitative forecasting technique to use on time series data, it is essential to identify patterns in the data<ref name="ProductionManagamentbook"/>.		Before deciding on which quantitative forecasting technique to use on time series data, it is essential to identify patterns in the data<ref name="ProductionManagamentbook"/>.

Joakimc: /* Other Estimation techniques */

2023-05-03T15:02:18Z

Other Estimation techniques

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	= Other Estimation techniques =		= Other Estimation techniques =
	*[[Cost Estimation Techniques for Projects]]		*[[Cost Estimation Techniques for Projects]]
			*[[Top-down vs bottom-up estimations]]
			*[[Reference class forecasting]]

	= Annotated bibliography=		= Annotated bibliography=

Joakimc: /* Time horizon */

2023-05-03T14:54:29Z

Time horizon

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	3. Forecasting accuracy decreases as the time horizon increases. In this case, uncertainty increases, and short-term forecasts are therefore often more accurate.		3. Forecasting accuracy decreases as the time horizon increases. In this case, uncertainty increases, and short-term forecasts are therefore often more accurate.

	~~== Time horizon ==~~

	The forecasting process can be structured in different levels, which are defined according to the objectives and the time horizon (short, medium and long term). These must be carried out under a continuous improvement model, executed periodically and their performance should be measured, in order to keep improving the quality of forecasts.

	~~Forecasts can be classified according to the time horizon covered<ref name="Obook"/>:~~

	~~'''Short-term forecasts.'''~~
	~~The main applicability of short-term forecasts lay at the operational level. It can be used in scheduling tasks, assignment of workers or immediate material needs.~~

	~~'''Medium-term forecasts.'''~~
	Medium-term forecasts are normally used to establish future resource needs. The goal is to make informed decisions regarding the purchase of raw materials, hiring of personnel, or acquisition of machinery and equipment.

	~~'''Long-term forecasts.'''~~
	~~Long-term forecasts are used in strategic planning, as it helps inform decisions by considering market opportunities, external factors, and internal resources.~~

	== Forecasting process ==		== Forecasting process ==

Joakimc: /* Benefits */

2023-05-03T14:54:05Z

Benefits

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	= Benefits =		= Benefits =
	The objective of forecasting systems is to provide information about future changes and their impact. It is a task that today can take up an entire department or even the possibility of having only one person responsible within the organization.

	As addressed in this article, there are multiple approaches to forecasting, from advanced mathematical/statistical methods to subjective judgement.		As addressed in this article, there are multiple approaches to forecasting, from advanced mathematical/statistical methods to subjective judgement.

	Nowadays, the forecasts are often made using advanced quantitative methods by means of specialized software, of which there are dozens on the market. The forecasts obtained are reviewed by related members of the entire organization (sales, project managers, senior management, or engineers) who must validate or correct them.

	Forecasts have a great value in terms of advanced project management, since, as mentioned above, they allow the company to obtain a vision of the future in advance, helping the organization to position itself for the future and to be able to make the relevant decisions.		Forecasts have a great value in terms of advanced project management, since, as mentioned above, they allow the company to obtain a vision of the future in advance, helping the organization to position itself for the future and to be able to make the relevant decisions.

Joakimc: /* Annotated references */

2023-05-03T13:32:22Z

Annotated references

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	*[[Cost Estimation Techniques for Projects]]		*[[Cost Estimation Techniques for Projects]]

	= Annotated ~~references~~ =		= Annotated bibliography=

	'''Hyndman, R.J., & Athanasopoulos, G. (2018) Forecasting: principles and practice, 2nd edition, OTexts: Melbourne, Australia. OTexts.com/fpp2. Accessed on 11-02-2023.''' The book contains a comprehensive introduction to both the fundamental forecasting techniques as well as modern state-of-the-art forecasting techniques. This includes qualitative as well as quantitative forecasting techniques. The book is mainly intended for undergraduate students, MBA students, and people in companies that can benefit from forecasting. It is actively used in teaching at Monash University, Australia. Each chapter in the book contains further references that can be used for a deeper understanding of the corresponding chapter.		'''Hyndman, R.J., & Athanasopoulos, G. (2018) Forecasting: principles and practice, 2nd edition, OTexts: Melbourne, Australia. OTexts.com/fpp2. Accessed on 11-02-2023.''' The book contains a comprehensive introduction to both the fundamental forecasting techniques as well as modern state-of-the-art forecasting techniques. This includes qualitative as well as quantitative forecasting techniques. The book is mainly intended for undergraduate students, MBA students, and people in companies that can benefit from forecasting. It is actively used in teaching at Monash University, Australia. Each chapter in the book contains further references that can be used for a deeper understanding of the corresponding chapter.

Joakimc: /* Forecasting in project management */

2023-05-03T13:30:31Z

Forecasting in project management

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	= Forecasting in project management =		= Forecasting in project management =
	Forecasting is important for a project manager as it helps to uncover future trends and insights. Forecasts can give a better understanding of the environment in which a project operates. From a system oriented problem solving perspective, forecasting methods are highly relevant when predicting the behavior of the environment as part of a situational analysis <ref name=”Turner”> Züst, R., & Troxler, P. (2006). No more muddling through. Springer, Dordrecht. doi, 10, 978-1. </ref>. In this context, forecasting is an essential tool to project managers when conducting analysis of the future state. Project managers are able to forecast a behavior and assess whether the forecasted outcome poses a threat or opportunity. For example, forecasts may indicate an increase in the expected completion time of a deliverable, which may indicate a weakness of the entire project. The project manager then has to take action to change course in response to this forecast to minimize the risk of delay in delivery. Forecasting can also be used to address opportunities and threats. For example, forecasts of customer demand can be used to determine whether new markets are emerging, and managers can determine whether new business opportunities or threats to existing market activities are present. Forecasting can therefore be a useful tool when conducting a [[SWOT Analysis]] or portfolio analysis.		Forecasting can be an important tool for a project manager as it helps to uncover future trends and insights. Forecasts can give a better understanding of the environment in which a project operates. From a system oriented problem solving perspective, forecasting methods are highly relevant when predicting the behavior of the environment as part of a situational analysis <ref name=”Turner”> Züst, R., & Troxler, P. (2006). No more muddling through. Springer, Dordrecht. doi, 10, 978-1. </ref>. In this context, forecasting is an essential tool to project managers when conducting analysis of the future state. Project managers are able to forecast a behavior and assess whether the forecasted outcome poses a threat or opportunity. For example, forecasts may indicate an increase in the expected completion time of a deliverable, which may indicate a weakness of the entire project. The project manager then has to take action to change course in response to this forecast to minimize the risk of delay in delivery. Forecasting can also be used to address opportunities and threats. For example, forecasts of customer demand can be used to determine whether new markets are emerging, and managers can determine whether new business opportunities or threats to existing market activities are present. Forecasting can therefore be a useful tool when conducting a [[SWOT Analysis]] or portfolio analysis.

	Within quantitative forecasting, project managers can use data from a variety of sources. Data can be taken from sales, budget, activity duration or even customer reviews. Even stakeholder satisfaction can be forecasted: A study on large-scale projects (Turner, R (2012)) <ref name="Turner"> Turner, R., & Zolin, R. (2012). Forecasting success on large projects: developing reliable scales to predict multiple perspectives by multiple stakeholders over multiple time frames. Project management journal, 43(5), 87-99 </ref> suggests that if well defined performance indicators are developed, stakeholder satisfaction can be measured and thereafter forecasted with quantitative forecasting techniques. The forecast can then indicate how stakeholders will perceive success months or years into a project. This is valuable information to project managers as they can use it in proactive decision-making of stakeholder relations. In general, if the required data can be obtained, quantitative forecasting techniques can be used to support proactive decision-making for project managers.		Within quantitative forecasting, project managers can use data from a variety of sources. Data can be taken from sales, budget, activity duration or even customer reviews. Even stakeholder satisfaction can be forecasted: A study on large-scale projects (Turner, R (2012)) <ref name="Turner"> Turner, R., & Zolin, R. (2012). Forecasting success on large projects: developing reliable scales to predict multiple perspectives by multiple stakeholders over multiple time frames. Project management journal, 43(5), 87-99 </ref> suggests that if well defined performance indicators are developed, stakeholder satisfaction can be measured and thereafter forecasted with quantitative forecasting techniques. The forecast can then indicate how stakeholders will perceive success months or years into a project. This is valuable information to project managers as they can use it in proactive decision-making of stakeholder relations. In general, if the required data can be obtained, quantitative forecasting techniques can be used to support proactive decision-making for project managers.

Joakimc: /* Quantitative methods */

2023-05-03T13:24:09Z

Quantitative methods

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	== Quantitative methods ==		== Quantitative methods ==

	Quantitative methods assume that the numerical information on historical data can be used to forecast the future. Once systems are in place that allow for the collection and analysis of data, quantitative forecasting techniques are less expensive, quicker to use, and appear to be more "objective" than qualitative methods. Forecasting models utilize time series data to make predictions about future outcomes. As such, quantitative forecasting techniques encompass a variety of statistical, mathematical, algorithmic, and optimization methods, including neural networks. These techniques rely on mathematical and statistical models to analyze past data and generate predictions about future patterns. The use of each technique depends directly on the availability of historical data<ref name=''book''> Montgomery, D., Jennings, C., Kulahci, M., (2008) Introduction to Time Series Analysis and Forecasting. </ref>.		Quantitative methods assume that the numerical information on historical data can be used to forecast the future. Once systems are in place that allow for the collection and analysis of data, quantitative forecasting techniques are often less expensive, quicker to use, and appear to be more "objective" than qualitative methods. Forecasting models utilize time series data to make predictions about future outcomes. As such, quantitative forecasting techniques encompass a variety of statistical, mathematical, algorithmic, and optimization methods, including neural networks. These techniques rely on mathematical and statistical models to analyze past data and generate predictions about future patterns. The use of each technique depends directly on the availability of historical data<ref name=''book''> Montgomery, D., Jennings, C., Kulahci, M., (2008) Introduction to Time Series Analysis and Forecasting. </ref>.

	=== Data pattern classification ===		=== Data pattern classification ===

Joakimc: /* Forecasting process */

2023-05-03T13:22:21Z

Forecasting process

← Older revision		Revision as of 13:22, 3 May 2023
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	== Forecasting process ==		== Forecasting process ==

	The forecasting process can be ~~described~~ in the following 5 steps<ref name="ProductionManagamentbook"/>.		The forecasting process can be summarized in the following 5 steps<ref name="ProductionManagamentbook"/>.

	'''1. Define the objective:'''		'''1. Define the objective:'''

Joakimc at 13:00, 3 May 2023

2023-05-03T13:00:54Z

← Older revision		Revision as of 13:00, 3 May 2023
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	''Revision of [[Forecasting and estimation techniques]], revised by Joakim Émile Cayouette''		''Revision of [[Forecasting and estimation techniques]], revised by Joakim Émile Cayouette''.

	'''Forecasting''' is the process of estimating future outcomes, such as demand, resource requirements, costs, and completion dates, based on past performance and current conditions. It is very common in any project or program that deviations occur on different scales between what is expected and reality. On many occasions, these deviations could have been reduced by analysing past experience and their respective forecasts<ref name="Obook">Hyndman, R.J., & Athanasopoulos, G. (2018) Forecasting: principles and practice, 2nd edition, OTexts: Melbourne, Australia. OTexts.com/fpp2. Accessed on 11-02-2023.</ref>. Within the field of project management, forecasting is most often used to forecast cost, activity time, and quality. These are the ground pillars that define successful project management according to the [[iron triangle]]. Forecasting is found to be a significant factor, especially within supply chain management, for the effectiveness of strategic execution <ref name=''book''> Smith, A. D., & Offodile, O. F. (2007) Exploring forecasting and project management characteristics of supply chain management. International Journal of Logistics Systems and Management, 3(2), 174-214. </ref>.		'''Forecasting''' is the process of estimating future outcomes, such as demand, resource requirements, costs, and completion dates, based on past performance and current conditions. It is very common in any project or program that deviations occur on different scales between what is expected and reality. On many occasions, these deviations could have been reduced by analysing past experience and their respective forecasts<ref name="Obook">Hyndman, R.J., & Athanasopoulos, G. (2018) Forecasting: principles and practice, 2nd edition, OTexts: Melbourne, Australia. OTexts.com/fpp2. Accessed on 11-02-2023.</ref>. Within the field of project management, forecasting is most often used to forecast cost, activity time, and quality. These are the ground pillars that define successful project management according to the [[iron triangle]]. Forecasting is found to be a significant factor, especially within supply chain management, for the effectiveness of strategic execution <ref name=''book''> Smith, A. D., & Offodile, O. F. (2007) Exploring forecasting and project management characteristics of supply chain management. International Journal of Logistics Systems and Management, 3(2), 174-214. </ref>.

Joakimc: /* Annotated references */

2023-05-03T09:54:24Z

Annotated references

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	'''Züst, R., & Troxler, P. (2006). No more muddling through. Springer, Dordrecht. doi, 10, 978-1.''' The book is used in the DTU course 42433 Advanced Project, Program and Portfolio management and focuses on systems engineering in complex projects. The book investigates the Problem–Solving Cycle with defining steps such as ''Chapter 5: Situational analysis''. Forecasting is a useful tool in conducting a situational analysis as mentioned in the ''Forecasting in project management'' section, especially in analysis of the future. The book also contains case examples where systems engineering theory has been applied for some interesting insights.		'''Züst, R., & Troxler, P. (2006). No more muddling through. Springer, Dordrecht. doi, 10, 978-1.''' The book is used in the DTU course 42433 Advanced Project, Program and Portfolio management and focuses on systems engineering in complex projects. The book investigates the Problem–Solving Cycle with defining steps such as ''Chapter 5: Situational analysis''. Forecasting is a useful tool in conducting a situational analysis as mentioned in the ''Forecasting in project management'' section, especially in analysis of the future. The book also contains case examples where systems engineering theory has been applied for some interesting insights.

	'''AXELOS. Managing Successful Projects with PRINCE2 2017 Edition, The Stationery Office Ltd, 2017. ProQuest Ebook Central'''. A book on project management process widely used and based on a large number of project management experts experience and knowledge. The book is made in a generic and simple way to be applicable for any type of project. Particularly ''chapter 9: Plans'' has been referenced in this article. The chapter explains the importance of plans, and how ''estimation'' plays ab important part in planning. Chapter 9.4.2 briefly summarizes some important estimation techniques often used in project management estimations.		'''AXELOS. Managing Successful Projects with PRINCE2 2017 Edition, The Stationery Office Ltd, 2017. ProQuest Ebook Central'''. A book on project management process widely used and based on a large number of project management experts experience and knowledge. The book is made in a generic and simple way to be applicable for any type of project. Particularly ''chapter 9: Plans'' has been referenced in this article. The chapter explains the importance of plans, and how ''estimation'' plays an important part in planning. Chapter 9.4.2 briefly summarizes some important estimation techniques often used in project management estimations.

	= References =		= References =

	<references/>		<references/>