4 Qs - Bracketing Forecasts

Quintessential Thought

We’re in a series about how to improve forecasting for agility. We’ve explored two of the four core practices: re-forecasting and reducing precision to increase accuracy.

Today, we turn our attention to bracketing.

I’m borrowing the term “bracketing” from photography, when we take multiple pictures of the same thing with different exposure settings. We end up with an over-exposed photo, an under-exposed photo, and a middle-of-the-road photo. Combining these photos gives us a clearer picture of things that might otherwise be hidden in the shadows or highlights.

Likewise, in forecasting, one way to increase agility and communicate more clearly is to bracket your forecasts. Give multiple forecasts that are based on probability or likelihood.

Here are a couple of examples:

• Our best case is to deliver in 30 days, our most likely forecast is to deliver in 45 days, and our worst case is to deliver in 80 days.

• We’re 40% likely to deliver in 30 days, 65% likely to deliver in 45 days, and 90% likely to deliver in 80 days.

While these examples are forecasting the schedule, you can use bracketing as you’re forecasting scope and budget as well.

No matter how you bracket, you need to use actual, historical data to make an empirical forecast. Most teams use velocity, throughout, or cycle time to accomplish this.

Another tremendous tool to help you bracket your forecasts is Monte Carlo simulation. After entering your parameters and historical data into a Monte Carlo tool, thousands of simulations are run with variations on your parameters. The resulting distribution of results will give you the likelihood of various outcomes.

One of the most powerful effects of bracketing your forecasts is how it changes the conversation with stakeholders. I have often seen resistance melt away when introducing stakeholders to bracketed forecasts. The conversation changes from tension to curiosity, and the situation becomes more collaborative.

Quotes

“You should never—and I mean never—communicate a forecast that does not include at least two things: a date range and a probability for that date range occurring.” — Daniel Vacanti

“Past performance speaks a tremendous amount about one's ability and likelihood for success.” — Mark Spitz

"Far better an approximate answer to the right question, which is often vague, than an exact answer to the wrong question, which can always be made precise" — John Tukey

Quick Step

Where have you seen bracketed forecasts used effectively?

Question

Identify the data and calculations you need in order to provide a bracketed forecast.

Advanced Product Owner, Mar 3-6

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