GFOA Forecasting Process Work Breakdown Structure
Below is a work breakdown structure (WBS) for the 10 steps presented by GFOA. The WBS details
the tasks associated with each of the 10 steps and gives an estimated duration for each task. Please
note that many of the tasks are completed in parallel. Therefore, the durations presented are not
additive. Also, you may find it necessary to adjust the estimated durations (or even the tasks) based
on local experiences and conditions. We have also included the links and contact information
referenced in the presentation at the end of this handout.
1. Form forecast team
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Identify team
members
Identify core expert(s) on revenue sources
Identify core expert(s) on items of expenditure
Identify auxiliary resources (people whose advise may be needed for
specific sources or uses)
3 days
3 days
5 days
Identify external resource(s) to provide validation ("reality check")
5 days
Get permission from home departments to involve recruits
3 days
Give personal invitation to recruits
Develop team charter
Review and sign team charter
Develop work breakdown structure
Review work breakdown structure
Train in forecasting methods
Demonstrate forecasting software
3 days
3 days
1 day
5 days
1 day
1 day
1 day
Recruit team
members
Orient team members
2. Define account groupings
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Review chart of
accounts structure
Obtain electronic copy of chart and 5 years of historical data
5 days
Identify logical groupings already in chart structure to use as a forecast
grouping.
1 day
Identify logical
groupings of accounts
Identify revenue groupings
Identify expenditure groupings
Use historical data to see if accounts in grouping have exhibited similar
behavior in the past
5 days
5 days
3 days
Review groupings with forecast team members
Review groupings with auxiliary resources where appropriate
1 day
3 days
Review groupings with external resource(s)
Record account grouping decisions and rationale
Enter groupings into forecasting software
5 days
2 days
2 days
Validate groupings
Document decisions
GFOA Forecasting Guide
3. Determine potential drivers of account groupings
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Identify most
important account
groupings
Determine which account groupings have the greatest influence on
future financial position
1 day
Identify any other account groupings that generate substantial political
interest
2 days
Identify drivers for
most important
account groupings
Identify specific legal or technical factors that drive behavior of the
account grouping (e.g., collection rates, contractual agreements)
Identify more general economic factors that drive behavior (e.g.,
inflation)
5 days
Identify special events that impact the account grouping (e.g., factory
closing, annexation)
10 days
Develop pictorial representations of drivers, where appropriate.
Identify specific legal or technical factors that drive behavior of the
account grouping (e.g., collection rates, contractual agreements)
5 days
3 days
Identify more general economic factors that drive behavior (e.g.,
inflation)
5 days
Identify special events that impact the account grouping (e.g., factory
closing, annexation)
5 days
Make sure team members agree on drivers
Validate drivers of department program revenue with departments
Validate drivers of special areas of expenditure (e.g., fuel) with
departments
1 day
5 days
5 days
Validate driver with external resource(s)
Record drivers in work files
Record revenue drivers in a dedicated revenue manual
5 days
1 day
3 days
Identify drivers for
other account
groupings.
Validate drivers
Document drivers
10 days
4. Identify Statistical Correlations
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Set up correlation
tests
Use work from Major Task 3 to identify relationships between
independent and dependent variables to be tested.
Gather historical data for variables
Set up computer model to run tests
Define a correlation coefficient threshold above which correlations will
be accepted
5 days
Run tests through computer model
Identify potentially useful correlations
Document useable correlations in work files
3 days
2 days
1 day
Run tests
Document
Page 2 of 5
5 days
5 days
1 day
GFOA Forecasting Guide
5. Find Use of Correlations in Statistical Equations
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Test regressions
Build regression models for useful correlations found in Major Task 4
Feed in data and run regressions
Test results of regression using statistical validation techniques
Build historical trending models for account grouping where regression
is not being used
5 days
2 days
2 days
3 days
Test historical trends
6. Identify Critical Contextual Information
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Scan the economic
environment
Interview external experts
Interview experts inside the government
Reflect on results of Major Task 3 to identify other special events or
factors
10 days
5 days
3 days
Identify most
important pieces of
contextual
information
Distribute results of interviews to team members
Hold team meeting to come to a consensus on most important factors
Arrive at consensus on likely impact of factors
Document decisions in work files
3 days
1 day
1 day
1 day
7. Develop Forecast Assumptions
Level 1 Sub Tasks
Level 2 Sub Tasks
Level 2
Duration
Develop baseline
Identify mathematical / statistical technique to be use for each account
grouping (see results of Major Task 5)
3 days
Identify contextual information to go into the baseline forecast (see
results of Major Task 6)
1 day
Identify any variables or contextual information that is too uncertain or
controversial to be included in the baseline
Develop foregoing into assumptions for alternative forecast scenarios
Document baseline and scenario assumptions in working files
3 days
Develop scenarios
Document
assumptions
Page 3 of 5
5 days
1 day
GFOA Forecasting Guide
8. Validate Assumptions
Level 1 Sub Tasks
Level 2 Sub Tasks
Duration
Prepare validation
document
Develop documentation into a presentation than can be shared with
others
2 days
Validate with team
Hold meeting to review all assumptions and make sure there is
consensus on assumptions
1 day
Validate with external
expert(s)
Review assumptions with external expert(s)
5 days
Validate with
departments
2 days
Validate with project
sponsors
Validate with
governing board
Identify specific revenues or expenditures assumptions that could
benefit from review by operating departments
Hold meetings with departments to validate
Review assumptions with CEO and/or CFO
Gain certainty that CEO and/or CFO are comfortable with assumptions
Hold informal individual meetings with board members to review
crucial assumptions
Respond to feedback
Modify assumptions in response to legitimate concerns raised
3 days
3 days
1 day
1 day
5 days
9. Make Forecast
Level 1 Sub Tasks
Make forecast
Validate forecast
Level 2 Sub Tasks
Apply assumptions to baseline data
Use alternative assumptions to develop forecast scenarios
Team conducts a "smell test" to see if the forecasts "feel right"
Modify forecasts as necessary
Run forecast results past individuals from Major Task 8
Duration
1 day
2 days
1 day
3 days
10 days
10. Present Forecast
Level 1 Sub Tasks
Develop forecast
presentation
Present forecast
Level 2 Sub Tasks
Confer with parties who have validated team's work to get their
perspective on presentation strategies
Duration
5 days
Determine forecast lengths to present (e.g., 5 years, ten years, etc.)
Determine economic scenarios to present
Determine financial strategy scenarios to present
Translate foregoing determinations into visualizations, using forecast
software
2 days
2 days
2 days
3 days
Develop forecast report
Give board members individual briefings on forecast
Work with CEO and CFO to prepare presentation for public meeting
Present forecast at public meeting
Interface more complicated forecast models, where needed
5 days
5 days
3 days
1 day
5 days
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GFOA Forecasting Guide
Other resources
o Financing the Future - GFOA’s financial planning book
o MuniCast - GFOA’s forecasting model,
o www.gfoa.org/municast
o GFOA financial planning blog,
o http://ltfp.gfoa.org
o City of Irvine 2010 Strategic Business Plan
o www.cityofirvine.org/about/strategic_business_plan/default.asp
Contact information
o Shayne Kavanagh, GFOA, Skavanagh@gfoa.org
o Ken Brown, Budget Officer, City of Irvine, kbrown@ci.irvine.ca.us
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