Guestimates - Sample

Brief Description and Proposed

Solution

(C) Consult Club, IIM Ahmedabad

Instructions

• For the guesstimate question you select, prepare two slides:

‒ The first slide (see template on Page 3) will be an interview transcript
‒ The second slide (see template on Page 4) will be a representation of the structure
used to solve the guesstimate

(C) Consult Club, IIM Ahmedabad 2

Guesstimate - Number of Schools - Interview Transcript

We are working on a project where we are helping an education sector client looking to establish Okay, that’s good. Anything else?
a presence in Mumbai. Can you help us with an estimate of the number of schools in Mumbai? I think it would be a good idea to do a sanity check. We came up with a figure of 2000 schools. Now,
I would like to ask a few clarifying questions before I begin. Am I supposed to count both Mumbai has an area of 600 sq kms. So that would give on an average, slightly more than 3 schools
government and private schools? Also, are we looking at pre-primary, primary and secondary per square km. I am just thinking whether that number is reasonable
schools or only a specific segment? No that’s fair. I get what you are trying to do. Tell me, do you think we could have incorporated any
Yes, let’s start with both government and private schools, we might need to bifurcate them later other factors into our calculations to arrive at a better estimate?
though. Yes, include all standards /grades. Yes. You had mentioned that it wasn’t very clear how I arrived at the figure of 30 lakh students.
Got it. So I think in the area I used to stay (Wadala), we had around 15 schools… Maybe, we could have detailed out the impact of factors like gender and drop out rates. We could
Wait, do you think that’s a good way to start? Maybe try approaching it in a more structured have further assumed separate numbers for these factors in the different economic classes. For
fashion? example, drop-out rates would be lower in middle income category than in the BPL category.
Similarly, enrolment ration of girls would be higher in middle income category than in the lower
Sorry, you are right. Okay, I think we can approach this problem in this way: income category
Number of schools in Mumbai = Number of school going students in Mumbai / Average strength
of each school Good job. I think you did reasonably well.
That’s a good approach. So how are you going to estimate the number of school going students? Thank you!
I will first divide the population into age groups. Since we are looking at all standards, our target
age group will be 3 - 18 years. Mumbai has a population of around 2 crores. Assuming an average
life expectancy of 60 years, and if I assume an equal distribution across age groups, we will have
around 70 lakh people upto age of 20. That would give us around 60 lakh school going students in
the age group of 3 – 18 years.
Anything else you need to do to further refine this estimate?
Yes, we would also need to consider income and gender factors. I will first tackle the income
criterion. We will divide the population into middle income, lower middle class and below poverty
line. I am not separately accounting for the upper income group, and would rather subsume it
into the middle income group. My estimate is that the distribution would be close to 50%, 30%
and 20% in the three income categories. Now, within the first segment, I will assume all students
go to school. Within the second segment, say 60% and within the last segment, say 20%. This
would give us close to 45 lakh students. I would further need to reduce this estimate considering
the unfortunate reality that the enrolment ratio amongst girls is lower than boys. Further, drop
out rates are also an important factor. Not all students who enter primary school will continue
through secondary school. After considering these factors, I would say that 30 lakh students
would be a fair estimate in my opinion.
Okay, I am not very clear on how you arrived at 30 lakhs but its fine, please go ahead.
I would now need to estimate the average number of students per school. School sizes vary
considerably, and I would like to take the area where I lived as a reference point. In Wadala, we
had 2 large schools, 4 medium sized schools and 3 small schools. I would take the split as
20%,40% and 40% to arrive at an estimate. Now, large schools have 5-6 divisions in each
standard, with around 40 students in each class. That would be a total of around 3000 students if I
count all the standards. Medium schools would have around 3-4 divisions plus they may not really
teach all standards. So they may have around 2000 students. Small schools would have close to
300 students assuming only 1 division. So an average school would probably have
0.2*3000 + 0.4*2000 + 0.4*300 = ~1500 students
So I would say number of schools = 30 lakh students /1500 students per school = 2000 schools

(C) Consult Club, IIM Ahmedabad 3

 Guesstimate 1

Estimate the number of schools in Mumbai

Interviewee Notes Case Facts Approach/ Framework

• Begin by understanding total • None
number of school going students Population of
in Mumbai and the average (Note to Mumbai
strength of each school candidates:
• Make sure that you incorporate 20 Mn
Sometimes,
demographics (age, gender), guesstimates may Not of school going
income characteristics and other require specific Of school going age
age
factors like drop out rates into information which
your estimate can be provided by 6 Mn
the interviewer.
For example, Middle income Lower income BPL
market share of a
company in a 3 Mn 1.8 Mn 1.2 Mn
particular
After
After considering
considering
segment/area.) 3 Mn 1.08 Mn 0.24 Mn
enrollment
enrollment ratio
ratio

After
After considering
considering other
other 30
30 lakh
lakh school
school going
going students
students
factors
factors

Average distribution of large, medium and small schools: 20%,40%,40%

Average strength of large, medium and small schools: 3000,2000, 300
Average number of students per school: 1500
Therefore, number of schools: 30 lakh students/1500 students per school = 2000 schools

Interview Summary
The candidate used good enough assumptions to get to an approximate number of schools in Mumbai in a year, however, could have defined certain assumptions better

Observations/Tips/Suggestions
First create structure, then put numbers to it.
Round off numbers, rather than trying to be too precise
Make reasonable assumptions and clarify with interviewers at each stage
Always do a sanity check
Listen to the interviewer comments carefully, and if time permits, try to address them

(C) Consult Club, IIM Ahmedabad 4