Forecasting: Asking Why and Discovering What’s Behind the When (Part II)

What are common reasons forecasting is used in project development.

Forecasting: Asking Why and Discovering What’s Behind the When

Forecasting: Blog Post 2 of 3

This is part two of John Yorke’s blog series about forecasting. In part one, John looked at why forecasting is needed and some of the differences between forecasting and estimating. In this post, he discusses the different reasons forecasting is needed.

What you will notice about these questions is that when you ask why, the first request for a forecast suddenly doesn’t make sense anymore. They are not really interested in the forecast itself, but in some other factor that they can infer from the forecast. If the intent is clear, then the question can be tailored to get the required information in a better way.

Example One: “I need a forecast – Why? … I need to know when I can allocate staff to the next product/project.

In this case, would a simple high-level guess be sufficient? I feel confident that staff won’t be available for the next 3-6 months, in 3 months let’s review, I’ll have a better idea then…I could put a lot of effort into a detailed forecast but an instinctive response may give all the information needed, saving us a lot of time and trouble.

Example Two: I need a forecast – Why? … I want to ship this to maximize the Christmas shopping period – or I want to time the launch for a trade show etc. This isn’t a request for a forecast, this is a request for an assurance that there will be something suitable available for a particular event/date. I can give you an assurance and confidence level without a detailed forecast, I may even change the priority of some features to ensure that those needs are factored into the product earlier. Or can de-scope some features to meet a certain date.

Example Three: I need a forecast – Why? … I have limited funds available, and I want to know when I can start getting a return on this investment. This isn’t a request for a forecast, it is a request to plan the product delivery so that revenue can be realized sooner and for the least investment. It may be possible to organize delivery so that future development is funded from delivering a reduced functionality product early. Or that development is spread over a longer period to meet your budget.

Example Four: I need a forecast – Why? … I need to budget, the way this company works I must get approval for my project expenses and staffing in advance so I need to present forecasts of costs and timelines. This answer is twofold, first – can you challenge the process? It might be better to have a fixed staffing pool and prioritize products/projects such that the most important ones are done first and then move on to the next, in which case the forecast for this is irrelevant, it is a question of prioritization. Or if the issue is ensuring staffing for the forthcoming year could I simply say whether this product will not be completed in the next budget year?

Example Five: I need a forecast – Why? … I want confidence that you know what you are doing. This is not a request for a forecast it is an assessment of trust in the team. There are many more reliable ways to ascertain confidence and trust in a team than asking for a forecast.

Example Six: I need a forecast – Why? … I have a dependency on an aspect of this project. This may not be a request for a forecast of this project, but more a request to prioritize a dependency higher so it is completed sooner to enable other work to start.

Example Seven: I need a forecast – Why? … I want to know if my project is on track. Essentially what you are saying is that I want to track actual progress of work done, against a guess made in advance that was based on incomplete information and unclear expectations. And I will declare this project to be ahead or behind based on this. I am sure those of you reading this will know that what you are measuring here is the accuracy of the original guess, not the health of the project. But we have been doing that for decades so why stop now?

Finally, this last example is the closest to a genuine need for a forecast:

Example Eight: I need a forecast – Why? … I need to prioritize or I want to know if I will get a good Return on Investment.

All of these are very similar questions, but are really requests for estimates and not forecasts. A rough estimate helps me gauge the cost and when I evaluate that against my determination of the value expected to be gained from the project, it may help me decide whether the project is worth doing at all or if there are other projects that are more important. For example, if it is a short project it may impact my decision on priorities. But even here it not the estimate that has value it is just information that helps me evaluate and prioritize. If I already know that this project has huge value and will be my top priority does forecasting aid with that decision?

In part three, John will look at some alternatives to forecasting.