Metric Definitions
Part of Analytical forecasting
Distinguishing a forecast from a target
Separate what the business expects from what it wants to achieve, and use the gap to plan action without changing the forecast to match the target.
A forecast estimates what may happen using information currently available. A target states what the organisation wants to achieve. The gap between them prompts a planning decision; changing the forecast merely to match the target hides that gap.
Give each item a different job
| Item | Question it answers | Who explains it |
|---|---|---|
| Forecast | What outcome do we expect under the stated assumptions? | Forecast owner |
| Target | What outcome are we trying to achieve? | Goal owner |
| Plan | What action will we take to address the gap? | Action owner |
The forecast and target may coincide, but that agreement should be explained. A forecast can also change while the target stays fixed. New information about demand may alter the outlook without changing the organisation’s goal.
Forecast vs Target: Key Differences
- Forecast
- What outcome do we expect under current assumptions?
- Target
- What outcome are we trying to achieve?
- Plan
- What action will close the gap between forecast and target?
Label the gap before discussing action
Suppose a team’s hypothetical forecast is 900 completed requests next month and its target is 1,000. The 100-request gap is not itself a modelling error. First check that both figures count the same requests and period. Then examine what action could change capacity or demand, when it could take effect and what uncertainty remains.
If an approved intervention changes the forecast assumptions, issue a dated revised forecast that states those assumptions. Do not treat an untested aspiration as an observed improvement. The plan can still be ambitious while the current forecast remains lower.
Managing the Forecast-Target Gap
- Assess actions to close the gapEvaluate changes in capacity, demand or timing; consider uncertainty.
- Revise forecast only if assumptions changeIssue a dated revised forecast with updated assumptions; do not adjust forecast to match target.
Keep revisions traceable
Assign responsibility for the forecast, target and plan. The forecast owner records the estimate, data cutoff, assumptions and uncertainty. The goal owner records the target and its period.
When new evidence changes the outlook, document the evidence and the revised estimate. When management changes the objective, revise the target or plan and keep the forecast’s meaning clear.
This distinction matters when a person supplying a forecast also benefits from meeting a target. Documented assumptions and later comparison with outcomes help others assess whether the estimate remained an honest prediction. A small team may combine roles, but it still needs to keep the decisions distinct.
Show all three in a review
A brief can list the forecast under current assumptions, the target for the same measure and period, the actions intended to close the gap, and the date for reassessing their expected effect. Include the measure definition, latest included data and material uncertainty.
When results arrive, compare them with the forecast that existed before the period and with the target. The first comparison informs forecasting; the second assesses performance against the goal. If a plan changed partway through, retain the earlier forecast and date any revision so readers can see what was expected before the intervention.
