Budgeting and forecasting are the pillars of proper financial management. Public sector managers should adopt best forecasting practices from a private sector since they are more likely to make decisions after bargaining with different agencies rather than based on an analysis unlike private sector managers. Therefore, forecasting practices of a private sector are more likely to be accurate than those of a public sector.
Deloittes enterprise project management (EPM) methodology includes four steps: vision and scope, planning and preparation, analysis and data gathering, and documenting and reporting. Deloittes EPM methodology determines organizations performance management cycle, which enables them to identify activities necessary for corporate performance management. According to the Deloitte experts, there are many similarities between the leading practice forecasting attributes across the sectors. At the same time, there is a number of differences between the sectors, capabilities that drive different behaviors and cultures. Thus, Deloittes EPM methodology consists of four steps.
According to the article, forecasting is imperative for taking pre-emptive actions to reassessing organizational targets. These actions include providing the basis for long-term strategic planning; pursuing opportunities and mitigating risk; assessing future cash ability and positioning and supporting the liabilities of an organization; providing the shareholders with the latest performance expectations; improving organizational responsiveness to fluctuations in the market; acquiring and planning additional resources necessary to achieve targets; identifying new market opportunities and customer trends; allocating money away from low value activities and making them deliver optimum value. Thus, forecasting is imperative for a variety of issues.
Nevertheless, there are numerous challenges associated with a forecasting process. The major challenges are related to the non-comparable and non-repeatable methods. First, each manager has his/her own way of forecasting since there is a lack of common methodologies and forecasting tools. Second, balancing demands is considered a challenge because forecasting is not a primary business activity for the majority of businesses. Forecasting requires significant investment of resources and time. Therefore, it is also difficult to balance meeting the demands of a business activity against delivering forecasting. Third, conflicting objectives management is one of the major forecasting challenges. In order to provide leading practice forecasts, companies should manage the conflicting objectives of numerous business functions. Fourth, insufficient processes and systems also pose a challenge. Time-consuming manual spreadsheets also create inefficiencies in the process of forecasting. In addition, the lack of integrated system often results in the inconsistency of the data quality or limited access to data that leads to poor quality forecasting. Fifth, the lack of quantitative analysis can be a problem since the simple approach does not always work. Sixth, the lack of tools and appropriate resources required for an analysis sufficiently undermines process effectiveness. Often, the data from the sales teams is not processed accurately, which leads to a situation when managers either do not have the right data to provide a realistic forecast or spend lots of time to collect the right data. Moreover, no penalties exist for inaccuracy, and there is often a lack of incentives for the forecast producers to improve it. Finally, estimating changes of a potential business is one of the major challenges of any forecast. Thus, there are numerous challenges that forecasting process faces.
To summarize, forecasting practices of a private sector are more accurate compared to public sectors approaches. Forecasting is imperative for a number of issues like long-term strategic planning, assessing future cash ability and many other. There are many challenges associated with the forecasting like the lack of tools and appropriate resources, and insufficient processes among others.

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