Finance · Forecasting · Component
The forecast
The current estimate of where the numbers are heading, over a horizon that rolls forward rather than shortening to nothing.
The deliverable
What it is
A forecast required to match the budget stops being an estimate, and the organisation loses the only instrument that would have given it warning.
The horizon should roll. A forecast running to the year end is useful in January and worthless in November, which is exactly when the next year is being decided.
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 estimate
The expected figures over the forecast horizon.
3 attributes: Forecast value · Period · Actual to date
LearnThe horizon
How far ahead the forecast reaches, and how often it rolls.
3 attributes: Horizon · Update cycle · Last updated
LearnThe assumptions
What the forecast depends on, and which of those have changed since last time.
3 attributes: Assumption · Changed · Confidence
Learn
Roll the horizon forward. A forecast that ends at the year end is worthless in November, which is when it matters.
The other components in forecasting
The scenario set
The alternative paths worth planning for, each with what would trigger it and what the organisation would do.
LearnThe accuracy record
Past forecasts against what actually happened, so that systematic bias becomes visible and correctable.
Learn