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Forecasting is the procedure for simulating the future by the creation of a picture based on historical information. The prime objective is to provide suitable information so that large amounts of capital are not lost or unexpectedly paid upon completion of a project, thus giving client assurance. In the UK, the largest problem estimators face is the prediction of outturn costs some time in the future, where the cost of a project will change due to movements in the costs of plant, labor, and materials over the duration of the project. This is normally carried out using an index. Ordinarily, indexes are published by one of the larger organizations such as Building Cost Information Service (BCIS); the Department of the Environment; or Davis, Langdon and Everest. This is all permissible as long as it is a general cost the estimator is looking for. If however, the cost should require more exactitude, then an index should be applied relevant to the particular industry. Moreover, forecasts produced by the publishing associations tend to be lacking in accuracy. Fitzgerald and Akintoye [6] showed that the BCIS forecast was no more accurate than the simplest of models. In this context, the authors feel that a forecast should be carried out on information related to the industry in which it is to serve. In view of these facts, the objectives of this paper are
1. to produce a simplified review of the most common objective and subjective methods in use in the business management field, and
2. to discuss a collective, objective statistical analysis with subjective evaluation, producing a more refined forecast [3]. The method to be discussed will be used to carry out a forecast of actual process industry data (an example of which is shown later). There are two stages to the joint method of analysis and forecast that will be outlined in this paper.
1. A classical time series decomposition of the data applied along with a delphic/identification method carried out manually using a calculator or simple spreadsheet software. The identification should be carried out periodically to determine the views of the managers on the general market. (This is a skeletal methodology developing an element of understanding.)
2. A more computerized approach, expanding on the process...