Finance · Forecasting · Component
The accuracy record
Past forecasts against what actually happened, so that systematic bias becomes visible and correctable.
The deliverable
What it is
Forecast accuracy is measurable and almost never measured. Recording it is the single change that most improves forecasting, and it requires no new method.
The finding is nearly always systematic bias in one direction, which is correctable once anyone can see it.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
The comparison
What was forecast against what happened, per period and per line.
3 attributes: Forecast · Actual · Horizon
LearnThe bias
Whether the error runs consistently in one direction.
3 attributes: Average error · Direction · By line
LearnThe correction
What was changed in the forecasting process as a result.
3 attributes: Correction · Applied from · Effect
Learn
Keep superseded forecasts. Without them, accuracy cannot be measured and bias cannot be corrected.
The other components in forecasting
The forecast
The current estimate of where the numbers are heading, over a horizon that rolls forward rather than shortening to nothing.
LearnThe scenario set
The alternative paths worth planning for, each with what would trigger it and what the organisation would do.
Learn