Forecasting

Targeting
30 March 2022

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 OBJECTIVES
1. Differentiate between Forecasting and
Targeting
2. Forecast using the different basic
methods
3. Assess forecast quality and determine the
best method, and
4. Set targets using the forecast
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 Forecasting and Target-Setting
Forecast is an honest assessment Target is what the organization
of likely future performance based would like to achieve
on the most current data and
information

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 Why forecast?
 Tells whether we are on track to meet targets.

 A “health check” against targets, confirming their

accuracy or providing an early warning signal of
problems ahead.
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 Why target?
 Can help an organization measure progress and
determine the tasks that must be improved
 Have a clearer path to achieve success and realize
its vision.
 Can help prioritize activities and tasks
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 Why target?

1. Provides guidance and direction;

2. Facilitates planning
3. Motivates and inspires
4. Helps evaluate and control performance.
Barney and Griffin
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 Access to Basic Education
Basic Education Coverage

Participation Rate / Net Enrolment Rate, 2008-2015

120%
 Access to
100% 96% 97%
95%
Secondary
94%
89% 89%
93%
Education is
80%
big problem
65% 64% 64% 65% 63%
with almost
60%
60% 60%
40% unmet
R a te

need
40%

Access to
20% Elementary
Education is
0% almost
2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

School Year
universal
NER – Elementary NER – Secondary

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 Access to Basic Education
Basic Education Coverage Trends

Forecasts, SY 2015-2016 to SY2022-2023

120%

97% 97% 97% 98% 99% 99% 100% 100%

100% 96% 95% 94% 96%
93%
89% 89%

80%
68% 68% 69% 70% 70%
65% 64% 65% 66% 66% 67%
64% 63%
60% 60%
60%


If the current trends is to continue, by SY
40% 2022-23, unmet need for Secondary
Education will still be 30%
20%
 On the other hand, Elementary Education will
reach universal access
0%

NER – Elementary NER – Secondary 8

How To Forecast

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 FORECASTING METHODS

1. Arithmetic Mean Method (AMM)

2. Arithmetic Straight Line (ASL)

3. Arithmetic Growth Curve (AGC)

4. Statistical Straight Line (SSL)

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 Arithmetic Mean Method
Year Data
Uses the average of
2011 97.10
2012 95.13 the given data as the
2013 93.80 forecast
2014 92.57
2015 91.05
Forecast =
2016
2017
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Arithmetic Mean Method
Year Historical Data Forecast
2011 97.10 93.93
2012 95.13 93.93
2013 93.80 93.93
2014 92.57 93.93
2015 91.05 93.93
2016 93.93
2017 93.93

Forecast =
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 Arithmetic Mean Method

 Produces a horizontal line forecast

 Useful when behavior of data does not
change over time or data is oscillatory
in behavior
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 Arithmetic Straight Line
Year Historical Data
2011 97.10
• Uses the average
2012 95.13
difference between
2013 93.80
sequential data to
2014 92.57 forecast
2015 91.05
2016
2017

Forecast = (Previous Year) + (Average Slope)

wherein Average Slope = 14
 Arithmetic Straight Line

Forecast = (Previous Year) + (Average Slope)

wherein Average Slope =

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 Arithmetic Straight Line
Useful when the data is too few
(minimum of two samples) and
when the behavior/trend of the
data is either increasing or
decreasing
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 Arithmetic Geometric Curve
Year Historical Data
2011 97.10
2012 95.13 • Uses the average
2013 93.80 growth rate between
2014 92.57 sequential data to
2015 91.05
forecast
2016
2017

Forecast = Previous Year + (Previous Year) * (Average Growth Rate)

or = Previous Year * (1 + Average Growth Rate)

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 Arithmetic Geometric Curve
Year Historical Data Difference Growth Rate Forecast
2011 97.10 97.10
2012 95.13 -1.97 -2.03% 95.55
2013 93.80 -1.33 -1.40% 94.03
2014 92.57 -1.23 -1.31% 92.53
2015 91.05 -1.52 -1.64% 91.05
2016 89.60
2017 Ave = -1.60% 88.17

Forecast = Previous Year + (Previous Year) * (Average Growth Rate)

or = Previous Year * (1 + Average Growth Rate)

Wherein : Growth Rate = (Y2 – Y1)/Y1 * 100

Ave. Growth Rate = (GR1 + GR2 + …. + GR4 / n 18

 Arithmetic Geometric Curve

Useful when the data is

geometric in nature; increasing
at an increasing rate in later
periods

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 Statistical Straight Line
Year Historical Data
2011 97.10 • Uses the
2012 95.13 equation of the
2013 93.80 straight line to
2014 92.57 minimize the
2015 91.05
variance of all
2016
2017
points

Forecast = a + bx
wherein b = slope, a = intercept 20
 Statistical Straight Line
Year Historical Data Forecast
2011 97.10 96.86
2012 95.13 95.40
2013 93.80 93.93
2014 92.57 92.46
2015 91.05 91.00
2016 89.53
2017 88.07

Forecast = a + bx
wherein b = slope, a = intercept 21
How do we know which method to
use?

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How do we know which
method to use?

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 Best Forecasting Method
1. Compute for the forecast for the years with historical data
2. Get the average difference between the forecast and historical data
- Mean Absolute Difference (MAD)
3. The method with the lowest MAD is the best forecasting method

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Mean Absolute Difference (MAD)

 A measure of forecast error and is

indicative of how good is the
forecasting method given
historical data

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 Mean Absolute Difference (MAD)

MAD = Ya – Yf

Average MAD = ∑ (Ya - Yf)

n
Where:
Ya – is the Actual data 26

Yf – is the Forecast data

 Best Forecasting Method
Year Data AMM AMM ASL ASL AGC AGC SSL SSL
Result Diff Result Diff Result Diff Result Diff
2011 97.10
2012 95.13 93.93 1.20 95.59 0.457 95.55 0.42 95.40 0.27
2013 93.80 93.93 0.13 94.08 0.275 94.03 0.23 93.93 0.13
2014 92.57 93.93 1.36 92.56 0.008 92.53 0.04 92.46 0.11
2015 91.05 93.93 2.88 91.05 0.000 91.05 0.00 91.00 0.05
Average 1.39 0.19 0.17 0.14

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How To Target

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 Targeting Methods

1.Increasing Target

2.Gap Based Target

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 Increasing Target

1.For Increasing Target, targets are derived based on the

assumption that figures are increasing regardless of the
previous data behavior and forecast, be it increasing or
decreasing in the future.

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Year Calculation of Target Illustrative Example
2016 Actual Data 89,942
2017 Actual Data 90,811
2018 Actual Data 91,853
2019 Actual Data 90,965
2020 Actual Data 90,057
Target Forecast
2021 2015 Enrollment x 1.017 91,588 90,879
2022 2017 Enrollment x 1.017 93,145 90,918
2023 2018 Enrollment x 1.017 94,728 90,956
2024 2019 Enrollment x 1.017 96,339 90,994
2025 2020 Enrollment x 1.017 97,977 91,033
2026 2021 Enrollment x 1.017 99,642 91,071 31
 Gap Based Target

1.A gap analysis is essentially taking a look at three key

elements:
• The current situation, or “performance”
• The ideal situation, or “potential”
• What needs to be done in order to get from
performance to potential, or “bridging the gap”

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Gap analysis process

Recommend

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 1. Current State
1. Understand the KPIs
2. Do simple trend analysis
3. Record all factors and attributes that are currently affecting your
KPIs

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 2. Future State
1. Set the Ideal scenario based on the strategic directions, goals and/or
objectives
2. Record all factors and attributes that will affect your KPIs

Alice: “Would you tell me, please, which way I ought to go from here?”
Cheshire Cat: “That depends a good deal on where you want to get to,”
Alice: “I don't much care where.
Cheshire Cat: “Then it doesn't matter which way you go,” said the Cat.
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 3. Gap
1. Make a Forecast
2. Compare your forecast vs ideal state
3. link the factors you listed about your current situation with the
factors listed for the ideal situation

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 3. Recommend
1. Gather supporting data/study
2. Make a target recommendation

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1. Where are you now?
Understanding the
current state
2. Where do you want to
be? Understanding the
future state
3. Understanding and
defining the gap
4. Bridging the gap
(Recommend). Setting
the target

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Forecasting and
Targeting
30 March 2022

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