Forecasting an Uncertain Future
Forecasting demand or budgets is critical for all businesses, whether in the private or public sector. We have developed an approach that can be applied across a range of business sectors to allow risk and uncertainty to be incorporated into options appraisal and budget forecasting. A key output is CORE, a spreadsheet based forecasting tool that is delivered to the client to allow further scenarios or options to be investigated
Process
The CORE forecasting tool is developed through a staged approach, which enables quick implementation in new business sectors and delivers a tailored approach to meet clients needs:
Application of Forecasting Tool (CORE)
The approach has been applied across a range of different business areas, the following two examples illustrate the wide range of applications that can benefit from the proposed approach.
Options Appraisal
Water Industry Example
The water company wished to compare a range of alternative options to manage its supply-demand balance. This included metering, mains renewal, water efficiency and a range of resource options.
Traditionally the least cost option would be identified through a scenario approach, but this does not take account of the different risks and uncertainties inherent in each option. Incorporation of risk into the process allowed the optimal scenario to be selected using the range of costs, and not just the most likely cost.
Budget Forecasts
Local Government Example
The council wished to develop a budget forecast for their Children Looked After taking into account historic variability in the ages of children and their likely length of stay. The forecasting tool also considered the differences between residential and fostering care provision.
A 3-year forecast budget and CLA was prepared that predicts the likely range of future budget requirements.