Sales and construction market forecast for tool and equipment hire company
This £500m turnover client had mainly grown through acquisition with the majority of its turnover coming from the construction sector. The client wished to develop its own model to forecast construction output by sector so that it could look at various scenarios for the future. Tied in with this the client also wished to develop a model to forecast its own sales for the following 2 years. We used two types of forecast models, causal and time series, to meet the requirements of the client.
The causal model for the total construction sector was based on various economic and construction specific variables including lag factors of up to 4 quarters. The client’s own sales model by product group and client sector was based mainly on the construction output which was forecast for all the main sectors. The historical fit was very good and the client now uses both models as key inputs to its planning process.