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PM Notebook
Summarizing Project Management Concepts for the PMP
Exam
Mohammad Elsheimy Road to PMP
PM NOTEBOOK
APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC
METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
1
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS
BASED ON DATA/INFORMATION GATHERED FROM VARIOUS
RELIABLE SOURCES. NONE OF THIS DATA/INFORMATION IS A
PROPERTY OF THE AUTHOR. NONE IS INTENDED TO MAKE A
PROFIT IN ANY WAY. THIS IS FOR PERSONAL USE ONLY.
PM NOTEBOOK
APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC
METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
2
No great man ever complains of want of opportunity.
Ralph Waldo Emerson
PM NOTEBOOK
APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC
METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
3
Table of Contents
Appendix F – Forecasting Methods...................................................................................................................... 4
Causal/Econometric Methods .......................................................................................................................... 4
Time Series Methods............................................................................................................................................. 4
Judgmental Methods.......................................................................................................................................... 5
Other methods...................................................................................................................................................... 5
PM NOTEBOOK
APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC
METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
4
Forecasting – predicting future project performance based the current performance to date.
Causal/Econometric Methods
This method assumes that it is possible to identify the underlying factors that might influence what is
being forecasted. For example, sales of ice cream might be associated with weather conditions.
Autoregressive Moving Average (ARMA) – A statistical analysis model that uses time series data to
predict future trends.
Econometrics – one of the tools economists use to forecast future developments in the economy.
In the simplest terms, econometricians measure past relationships among such variables as
consumer spending, household income, tax rates, interest rates, employment, and the like, and
then try to forecast how changes in some variables will affect the future course of others.
Regression Analysis – A set of statistical processes for estimating the relationships among variables
like cost, labor, and other project metrics.
 Linear
 Non-linear
Time Series Methods
This method uses historical data to estimate future outcomes.
Earned Value Management (EVM) – To quantify variances.
Extrapolation – the action of estimating or concluding something by assuming that existing trends
will continue or a current method will remain applicable.
Growth curve – A growth curve is an empirical model of the evolution of a quantity over time.
PM NOTEBOOK APPENDIX F – FORECASTING METHODS | JUDGMENTAL METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
5
Linear prediction – is a mathematical operation where future values of a discrete-time signal are
estimated as a linear function of previous samples.
Moving Average (MA) – a mathematical result that is calculated by averaging a number of past
data points.
Trend Estimation – a statistical technique to aid interpretation of data.
Judgmental Methods
Incorporate intuitive judgment, opinions and subjective probability estimates, and is used in cases
where there is lack of historical data or during completely new and unique market conditions.
Composite forecasts – This function combines forecasts from alternative forecasting methods
(such as times series, casual, and/or judgmental) for a particular brand, product family or product.
Each forecast is based on the same historical data but uses a different technique.
Delphi method – a forecasting method based on the results of questionnaires sent to a panel of
experts. Several rounds of questionnaires are sent out, and the anonymous responses are
aggregated and shared with the group after each round. The experts are allowed to adjust their
answers in subsequent rounds.
Forecast by analogy – a forecasting method that assumes that two different kinds of phenomena
share the same model of behavior.
Scenario building – a policy analysis tool that helps describe a possible set of future conditions
Surveys
Technology forecasting – attempts to predict the future characteristics of useful technological
machines, procedures or techniques.
Other methods
Ensemble forecasting – a method used in numerical weather prediction. Instead of making a
single forecast of the most likely weather, a set (or ensemble) of forecasts is produced. This set of
forecasts aims to give an indication of the range of possible future states of the atmosphere.
PM NOTEBOOK APPENDIX F – FORECASTING METHODS | OTHER METHODS
DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION
GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY
OF THE AUTHOR.
6
Probabilistic forecasting – represents an estimation of the respective probabilities for all the
possible future outcomes of a random variable.
Simulation

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PM Notebook - Appendix F - Forecasting Methods

  • 1. PM Notebook Summarizing Project Management Concepts for the PMP Exam Mohammad Elsheimy Road to PMP
  • 2. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 1 DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA/INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA/INFORMATION IS A PROPERTY OF THE AUTHOR. NONE IS INTENDED TO MAKE A PROFIT IN ANY WAY. THIS IS FOR PERSONAL USE ONLY.
  • 3. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 2 No great man ever complains of want of opportunity. Ralph Waldo Emerson
  • 4. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 3 Table of Contents Appendix F – Forecasting Methods...................................................................................................................... 4 Causal/Econometric Methods .......................................................................................................................... 4 Time Series Methods............................................................................................................................................. 4 Judgmental Methods.......................................................................................................................................... 5 Other methods...................................................................................................................................................... 5
  • 5. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | CAUSAL/ECONOMETRIC METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 4 Forecasting – predicting future project performance based the current performance to date. Causal/Econometric Methods This method assumes that it is possible to identify the underlying factors that might influence what is being forecasted. For example, sales of ice cream might be associated with weather conditions. Autoregressive Moving Average (ARMA) – A statistical analysis model that uses time series data to predict future trends. Econometrics – one of the tools economists use to forecast future developments in the economy. In the simplest terms, econometricians measure past relationships among such variables as consumer spending, household income, tax rates, interest rates, employment, and the like, and then try to forecast how changes in some variables will affect the future course of others. Regression Analysis – A set of statistical processes for estimating the relationships among variables like cost, labor, and other project metrics.  Linear  Non-linear Time Series Methods This method uses historical data to estimate future outcomes. Earned Value Management (EVM) – To quantify variances. Extrapolation – the action of estimating or concluding something by assuming that existing trends will continue or a current method will remain applicable. Growth curve – A growth curve is an empirical model of the evolution of a quantity over time.
  • 6. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | JUDGMENTAL METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 5 Linear prediction – is a mathematical operation where future values of a discrete-time signal are estimated as a linear function of previous samples. Moving Average (MA) – a mathematical result that is calculated by averaging a number of past data points. Trend Estimation – a statistical technique to aid interpretation of data. Judgmental Methods Incorporate intuitive judgment, opinions and subjective probability estimates, and is used in cases where there is lack of historical data or during completely new and unique market conditions. Composite forecasts – This function combines forecasts from alternative forecasting methods (such as times series, casual, and/or judgmental) for a particular brand, product family or product. Each forecast is based on the same historical data but uses a different technique. Delphi method – a forecasting method based on the results of questionnaires sent to a panel of experts. Several rounds of questionnaires are sent out, and the anonymous responses are aggregated and shared with the group after each round. The experts are allowed to adjust their answers in subsequent rounds. Forecast by analogy – a forecasting method that assumes that two different kinds of phenomena share the same model of behavior. Scenario building – a policy analysis tool that helps describe a possible set of future conditions Surveys Technology forecasting – attempts to predict the future characteristics of useful technological machines, procedures or techniques. Other methods Ensemble forecasting – a method used in numerical weather prediction. Instead of making a single forecast of the most likely weather, a set (or ensemble) of forecasts is produced. This set of forecasts aims to give an indication of the range of possible future states of the atmosphere.
  • 7. PM NOTEBOOK APPENDIX F – FORECASTING METHODS | OTHER METHODS DISCLAIMER: THE MATERIAL INCLUDED IN THIS DOCUMENT IS BASED ON DATA / INFORMATION GATHERED FROM VARIOUS RELIABLE SOURCES. NONE OF THIS DATA / INFORMATION IS A PROPERTY OF THE AUTHOR. 6 Probabilistic forecasting – represents an estimation of the respective probabilities for all the possible future outcomes of a random variable. Simulation