Forecasting future performance with confidence - Revision history

Designing Buildings at 07:27, 25 January 2021

2021-01-25T07:27:23Z

← Older revision		Revision as of 07:27, 25 January 2021
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	This article was originally published on the [https://futureofconstruction.org/solution/forecasting-future-performance-with-confidence/ Future of Construction Knowledge Sharing Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]		This article was originally published on the [https://futureofconstruction.org/solution/forecasting-future-performance-with-confidence/ Future of Construction Knowledge Sharing Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]

−	[[Category:~~Publications_/_reports~~]] [[Category:~~Research_/_Innovation~~]] [[Category:DCN_Research,_Development_and_Innovation]] [[Category:Theory]]	+	[[Category:DCN_Commentary]] [[Category:DCN_Guidance]] [[Category:DCN_Research,_Development_and_Innovation]] [[Category:Publications_/_reports]] [[Category:Research_/_Innovation]] [[Category:Theory]]

Editor at 09:38, 7 June 2017

2017-06-07T09:38:41Z

← Older revision		Revision as of 09:38, 7 June 2017
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	[[File:IStock-509686834.jpg\|link=File:IStock-509686834.jpg]]		[[File:IStock-509686834.jpg\|link=File:IStock-509686834.jpg]]

−	Written By:	+	= The challenge =
		+
		+	To report the most likely project outcome with confidence.
		+
		+	Project reporting typically focuses on a single anticipated outcome rather than showing a range of potential outcomes with their associated levels of confidence. Providing a range of potential outcomes with likelihoods:
		+
		+	* Allows early intervention when projects stray off target, thereby increasing the likelihood of a successful outcome.
		+	* Enables potential changes in funding requirements to be identified in a timely manner along with necessary approvals that can then be processed without delaying the project.
		+
		+	While the text below relates to the internal reporting of projects, it could equally be used to report potential project outcomes from supplier to client.
		+
		+	= The idea =
		+
		+	Assessing and reporting a project’s most likely financial outcome, as well as best- and worst-case scenarios.
		+
		+	The anticipated project outcome is presented as 'most likely', while also showing the best and worst cases. The most likely, best and worst cases are tracked on a regular basis to provide trends, giving a further level of confidence in the project reporting.
		+
		+	This gives managers and project leaders a quantified perspective on the potential project outcome, which is more tangible and useful than a single forecast outcome or a 'Red, Amber, Green' status. The process is simple and can be readily adopted, with limited training, unlike sophisticated risk analysis insight articles.
		+
		+	= The impact =
		+
		+	Better awareness of most likely project outcomes.
		+
		+	Skanska uses the technique to improve the predictability of project outcomes, which in turn helps with business financial forecasting. The approach is used for profitability and cash forecasting at a project and business unit level, giving senior management a better appreciation of a project or business unit’s financial health.
		+
		+	= The barriers to innovation – and the solutions =
		+
		+	It is management, not financial, accounting.
		+
		+	Key internal barriers include:
		+
		+	* A high degree of transparency is required in the project life cycle along with trust between senior managers and project teams. Managers and project leaders must not abuse the trust generated by transparent sharing of project performance data.
		+	* Incentivisation, which is linked to the previous point. When setting bonus targets, it is important not to abuse the transparency required for the technique to be effective.
		+	* 'That’s not the way we do things around here' or 'not invented here' mindsets, typical of any change. Strong leadership overcomes this.
		+	* Confusion with strict accounting rules. The use of confidence reporting is part of management accounting and requires judgement and assessment, not simply the strict application of accounting rules.
		+
		+	There are no key external barriers to this approach. As it relates to management accounting it is not governed by strict accountancy rules
		+
		+	= The way forward =
		+
		+	Introducing confidence reporting through the use of a pilot, alongside existing reporting systems allows project teams and management to build an understanding of, and confidence in, the process.
		+
		+	A relatively simple process will be required along with training therein. The best results are obtained when the project management team establishes and owns the forecasts, not simply leaving it to the finance team. The finance team must, however, be involved to ensure there is no contradiction with accounting rules.
		+
		+	The approach demands transparency and trust between the project team and those to whom the numbers are being reported. The approach is an art, not a science, and therefore needs people who are not merely slaves to process.
		+
		+	-----
		+	Written by:

	Roger Bayliss, Senior Vice-President, Global Operational Efficiency, Skanska, Sweden		Roger Bayliss, Senior Vice-President, Global Operational Efficiency, Skanska, Sweden

−	This article was originally published on the [https://futureofconstruction.org/ Future of Construction Knowledge Sharing~~] [https://futureofconstruction.org/~~ Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]	+	This article was originally published on the [https://futureofconstruction.org/solution/forecasting-future-performance-with-confidence/ Future of Construction Knowledge Sharing Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]

−	[[Category:Publications_/_reports]] [[Category:Research_/_Innovation]] [[Category:Theory]]	+	[[Category:Publications_/_reports]] [[Category:Research_/_Innovation]] [[Category:DCN_Research,_Development_and_Innovation]] [[Category:Theory]]

Editor: moved Forecasting Future Performance with Confidence to Forecasting future performance with confidence

2017-06-07T09:36:40Z

moved Forecasting Future Performance with Confidence to Forecasting future performance with confidence

← Older revision

Revision as of 09:36, 7 June 2017

Designing Buildings at 15:15, 12 April 2017

2017-04-12T15:15:59Z

← Older revision		Revision as of 15:15, 12 April 2017
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−	[[File:IStock-509686834.jpg]]	+	[[File:IStock-509686834.jpg\|link=File:IStock-509686834.jpg]]

−	Written By:~~<br />~~	+	Written By:
−	Roger Bayliss, Senior Vice-President, Global Operational Efficiency, Skanska, Sweden	+
		+	Roger Bayliss, Senior Vice-President, Global Operational Efficiency, Skanska, Sweden

	This article was originally published on the [https://futureofconstruction.org/ Future of Construction Knowledge Sharing] [https://futureofconstruction.org/ Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]		This article was originally published on the [https://futureofconstruction.org/ Future of Construction Knowledge Sharing] [https://futureofconstruction.org/ Platform] and the [http://www.weforum.org/agenda/2017/03/elon-musk-innovation-construction-industry WEF Agenda Blog]
		+
		+	[[Category:Publications_/_reports]] [[Category:Research_/_Innovation]] [[Category:Theory]]

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2017-04-05T11:54:53Z

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