Talk:Forecasting and estimation techniques - Revision history

Joakimc: /* Forecasting in project management */

2023-04-01T13:22:23Z

Forecasting in project management

← Older revision		Revision as of 13:22, 1 April 2023
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	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 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.

	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.

	As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.		As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.

Joakimc: /* Forecasting in project management */

2023-04-01T13:21:22Z

Forecasting in project management

← Older revision		Revision as of 13:21, 1 April 2023
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	As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.		As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.

	For a forecast performed by project managers to be successful, it is important to clearly plan the scope of the forecast and closely communicate with stakeholders to assure that project timeline, budget, objective and expected outcomes are considered when planning the forecast. Although forecasting can be carried out by one person, decision-making larger organizations often relies on collaboration with upper management. By collaborating, upper management can gain a better understanding of the forecast developed by the project manager and thereby be better prepared when making informed decisions about the project. The study conducted by Turner et al <ref name=~~”Turner”><~~/~~ref~~> indicates that including stakeholders when deciding and defining performance indicators when carrying out the forecast will increase its success. This demonstrates the importance in collaboration and clear communication with stakeholders when forecasting.		For a forecast performed by project managers to be successful, it is important to clearly plan the scope of the forecast and closely communicate with stakeholders to assure that project timeline, budget, objective and expected outcomes are considered when planning the forecast. Although forecasting can be carried out by one person, decision-making larger organizations often relies on collaboration with upper management. By collaborating, upper management can gain a better understanding of the forecast developed by the project manager and thereby be better prepared when making informed decisions about the project. The study conducted by Turner et al <ref name="Turner"/> indicates that including stakeholders when deciding and defining performance indicators when carrying out the forecast will increase its success. This demonstrates the importance in collaboration and clear communication with stakeholders when forecasting.

	= Limitations =		= Limitations =

Joakimc: /* Forecasting in project management */

2023-04-01T13:20:13Z

Forecasting in project management

← Older revision		Revision as of 13:20, 1 April 2023
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	As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.		As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.

	For a forecast performed by project managers to be successful, it is important to clearly plan the scope of the forecast and closely communicate with stakeholders to assure that project timeline, budget, objective and expected outcomes are considered when planning the forecast. Although forecasting can be carried out by one person, decision-making larger organizations often relies on collaboration with upper management. By collaborating, upper management can gain a better understanding of the forecast developed by the project manager and thereby be better prepared when making informed decisions about the project. The study conducted by Turner et al <ref name=”Turner”> indicates that including stakeholders when deciding and defining performance indicators when carrying out the forecast will increase its success. This demonstrates the importance in collaboration and clear communication with stakeholders when forecasting.		For a forecast performed by project managers to be successful, it is important to clearly plan the scope of the forecast and closely communicate with stakeholders to assure that project timeline, budget, objective and expected outcomes are considered when planning the forecast. Although forecasting can be carried out by one person, decision-making larger organizations often relies on collaboration with upper management. By collaborating, upper management can gain a better understanding of the forecast developed by the project manager and thereby be better prepared when making informed decisions about the project. The study conducted by Turner et al <ref name=”Turner”></ref> indicates that including stakeholders when deciding and defining performance indicators when carrying out the forecast will increase its success. This demonstrates the importance in collaboration and clear communication with stakeholders when forecasting.

	= Limitations =		= Limitations =

Joakimc: /* Forecasting in project management */

2023-04-01T13:19:34Z

Forecasting in project management

← Older revision		Revision as of 13:19, 1 April 2023
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	As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.		As qualitative forecasting is based on less tangible information, the information can come from sources such as interviews, observations, and focus groups. Qualitative techniques can help project managers better understand the dynamics of their projects and how likely it is to meet their goals. For example, qualitative techniques can be used to forecast the estimated completion date of a project by allowing experts to make estimations based on their knowledge and the situation they observe. [[The Delphi Technique in Project Management]] can be used in this case to gather expert estimates when formulating a complete company estimate.

			For a forecast performed by project managers to be successful, it is important to clearly plan the scope of the forecast and closely communicate with stakeholders to assure that project timeline, budget, objective and expected outcomes are considered when planning the forecast. Although forecasting can be carried out by one person, decision-making larger organizations often relies on collaboration with upper management. By collaborating, upper management can gain a better understanding of the forecast developed by the project manager and thereby be better prepared when making informed decisions about the project. The study conducted by Turner et al <ref name=”Turner”> indicates that including stakeholders when deciding and defining performance indicators when carrying out the forecast will increase its success. This demonstrates the importance in collaboration and clear communication with stakeholders when forecasting.

	= Limitations =		= Limitations =

Joakimc at 12:11, 1 April 2023

2023-04-01T12:11:38Z

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 '''5. Validation:'''
 Forecast accuracy should be evaluated and monitored to conclude if the forecast is performing as intended. In the case that it is not, decisions on forecasting technique, validity of data, and assumption can be revised.
 = Forecasting methods =

Joakimc: /* Quantitative methods */

2023-04-01T12:04:48Z

Quantitative methods

← Older revision		Revision as of 12:04, 1 April 2023
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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''> ~~''Introduction to Time Series Analysis and Forecasting.~~ D.~~Montgomery~~, C. ~~Jennings~~, M. ~~Kulahci~~, 2008'' </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 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: /* Qualitative methods */

2023-04-01T12:03:31Z

Qualitative methods

← Older revision		Revision as of 12:03, 1 April 2023
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	== Qualitative methods ==		== Qualitative methods ==

	Qualitative methods allow for forecasting when there is no historical data or when such data is not relevant for forecasting. They are based on intuition and experience and often rely on expert judgement. The outcome of each method differentiates as they are contingent on the composition of participants involved, ranging from individuals who possess an intimate knowledge of the industry to those who possess the ability to provide insightful recommendations regarding future market demand. The main advantage of qualitative methods is that they consider intangible factors that are not considered in quantitative methods. For this reason, it is particularly useful when a company enters a new industry or launches a new product in the market<ref name=''book''> ~~''Facilities Planning and Design. A.~~ García-Díaz, J. MacGregor ~~Smith~~, 2014'' </ref>.		Qualitative methods allow for forecasting when there is no historical data or when such data is not relevant for forecasting. They are based on intuition and experience and often rely on expert judgement. The outcome of each method differentiates as they are contingent on the composition of participants involved, ranging from individuals who possess an intimate knowledge of the industry to those who possess the ability to provide insightful recommendations regarding future market demand. The main advantage of qualitative methods is that they consider intangible factors that are not considered in quantitative methods. For this reason, it is particularly useful when a company enters a new industry or launches a new product in the market<ref name=''book''> García-Díaz, A., Smith, J. MacGregor., (2014) Facilities Planning and Design. </ref>.

	=== Consumer surveys ===		=== Consumer surveys ===

Joakimc: /* Elements of a successful forecast */

2023-04-01T12:02:19Z

Elements of a successful forecast

← Older revision		Revision as of 12:02, 1 April 2023
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	== Elements of a successful forecast ==		== Elements of a successful forecast ==
	Moon et al (1998), based on their long involvement and experience in the forecasting field, suggest seven fundamental principles for forecast management, which if correctly applied could increase the efficiency, coordination and performance of the company. <ref name=''book''> ~~''Seven Keys to Better Forecasting.~~ Mark A. ~~Moon, John T. Mentzer, Carlo D~~. ~~Smith~~, ~~and Michael S~~. ~~Garver~~, 1998'' </ref>.		Moon et al (1998), based on their long involvement and experience in the forecasting field, suggest seven fundamental principles for forecast management, which if correctly applied could increase the efficiency, coordination and performance of the company. <ref name=''book''> Moon, Mark A. ., et. al, (1998) Seven Keys to Better Forecasting. </ref>.

	These seven key principles are the following:		These seven key principles are the following:

Joakimc: /* Big Idea */

2023-04-01T12:01:11Z

Big Idea

← Older revision		Revision as of 12:01, 1 April 2023
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	= Big Idea =		= Big Idea =
	Depending on the discipline (business, economics, politics, industry, society, commerce...), the term "forecast" will have one meaning or another. At the level of operations management, forecasting is defined as an approximation to future circumstances through a subjective and objective assessment being different from past data, but taking them as a starting point. The goal of forecasting is to provide insights and support decision-making. Under no circumstances can forecasts be taken as if they were a "crystal ball" capable of seeing the future, since they will always have a percentage of error, depending on how the forecast has been made, as we will see below. This means that forecasts should always be accompanied by a measure of uncertainty <ref name=''book''> ''Operations Management, School of Business Bangladesh Open University. ~~Ziaul Haq Mamun, Ali Ahsan, 2005''~~ </ref>.		Depending on the discipline (business, economics, politics, industry, society, commerce...), the term "forecast" will have one meaning or another. At the level of operations management, forecasting is defined as an approximation to future circumstances through a subjective and objective assessment being different from past data, but taking them as a starting point. The goal of forecasting is to provide insights and support decision-making. Under no circumstances can forecasts be taken as if they were a "crystal ball" capable of seeing the future, since they will always have a percentage of error, depending on how the forecast has been made, as we will see below. This means that forecasts should always be accompanied by a measure of uncertainty <ref name=''book''> Mamun, Ziaul Haq., et al. (2005) Operations Management, School of Business Bangladesh Open University. </ref>.

	Various forecasting techniques exists. The choice of technique depends on the characteristics of the data, the nature of the forecasting problem, and the desired level of accuracy. However, there are som key features that are common to all forecasts <ref name="ProductionManagamentbook"> Stevenson, William J., et al. Operations management. Boston: McMcGraw-Hill Irwin, 2007 </ref>:		Various forecasting techniques exists. The choice of technique depends on the characteristics of the data, the nature of the forecasting problem, and the desired level of accuracy. However, there are som key features that are common to all forecasts <ref name="ProductionManagamentbook"> Stevenson, William J., et al. Operations management. Boston: McMcGraw-Hill Irwin, 2007 </ref>:

Joakimc: /* DRAFT REVISION */

2023-04-01T11:59:35Z

DRAFT REVISION

← Older revision		Revision as of 11:59, 1 April 2023
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	= DRAFT REVISION =		= DRAFT REVISION =
	'''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>.

	Throughout this paper, we will focus on the fundamental and state-of-the-art methods used in forecasting and on how organizations can optimize supply chains and management of projects through their use.		Throughout this paper, we will focus on the fundamental and state-of-the-art methods used in forecasting and on how organizations can optimize supply chains and management of projects through their use.