Factor ordered forecast - Jameson & Company

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Executives tend to manage using historical data. This management style can be categorized as reactive versus proactive. Government contractors need to shift that mindset and be more proactive about managing their business since government funding is not recurring and management needs to be more forward looking.

One aid that can be used to proactively manage is a “factor ordered forecast”. A factor ordered forecast forces management to assess the likelihood of a proposed job being funded. That likelihood (i.e. probability) is then applied to the proposed cost to arrive at potential funding.

Based on the potential funding from the factor ordered forecast management can make staffing decisions. If the forecast is positive, then you may want to begin hiring; if it looks bleak, then you may decide to cut staff.

An overly optimistic forecast can lead to over staffing and decreased profitability, so you will want to be conservative when assigning the likelihood of winning to each award. Be realistic, but cautious.

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Ed Jameson, CPA, Managing Partner

I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.