Forecasting and CBA Option 1As we are discovering, Cost Benefit Analysis is based on assumptions about financial forecasts of future cash flows and expenses. Since the future is unknown, getting consensus on inputs can often be the most challenging part of running a Cost Benefit Analysis.In Assignment 2, we find five colleagues who each have very different views of the future. Referencing our readings this week and drawing on your own personal experiences, answer the following questions:
Why do skilled professionals working in the same business often have significantly different forecasts and views of the future? Share an example from your own work experience where your colleagues had very different forecasts for the same item.
How can we make better use of data (past performance, industry outlook, etc.) to improve our forecasts and resolve disagreements?
Would “sensitivity analysis” have helped Management understand the potential variations driven by changes in assumptions?
After the forecast is complete, describe the communication process you would use to convey results and successes to stakeholders, lenders, and employees.
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Option 2As you’re learning in Assignment 2, a key technique in managerial accounting/finance is the use of “Cost Benefit Analysis” to help management make better business decisions.
Define this approach in your own words and discuss 2 applications of this concept in your current work environment (examples might include make vs. buy, plant location, new product or packaging, downsizing, acquisition/divestiture, etc.).
Discuss a variable or assumption within the project where the data was difficult to obtain — and what you did to develop a reasonable assumption for the project economics.
Additionally, share or create one example where using financial data and cost benefit analysis that did, or could have, led to a better decision.
Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates’ initial posts by Sunday, midnight of your time zone.
1st person to respond to
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RE: Week 9 Discussion AttachmentCOLLAPSE
Hello Professor/Classmates,
I chose Option 2 this week.
Forecasting and cost-benefit analysis are two words that are often associated with Acquisition and Government Contracting. As stewards of the taxpayers’ dollars, interested parties (EoP, 1) must exercise due diligence in establishing government estimates by looking at previous buys, historical data, and market changes. In 2020 DoDs Inspector General reported on ten operational or management challenges; Challenge #9 (2) was among them.
Acquisitions from a government perspective are the procuring of a product, service, and construction at a fair and reasonable price (Best Value). Many layers and steps go into this process. The following is a snapshot of generating and shaping a requirement and benefit analysis is the critical part of the process. This process can involve a PDT (Project Development Team) or a few individuals based on complexity.
