What are the odds? Transforming forecasts with probabilities

This is a more generic meetup version of the talk I've uploaded a few other times on probabilistic forecasting.

Transcript

1. @everydaykanban | @55degreesAB 1 How well does your work fl ow fl ow? Julia Wester /in/juliawester/ @everydaykanban Co-Founder, 55 Degrees AB What are the odds? Transform your forecasts with probabilities
2. @everydaykanban | @55degreesAB Follow us on social media /company/55degrees @55degreesAB @55degreesAB /55degreesAB /c/ActionableAgileAnalytics Apps that make it easier to get work done 🎉 From re fi ning work, to bringing external data into Jira, to improving work fl ows and creating reliable forecasts, 55 Degrees has apps to make your work less stressful.
3. 3 @everydaykanban | @55degreesAB Benjamin Franklin November 1789 “…IN THIS WORLD, NOTHING IS CERTAIN EXCEPT DEATH AND TAXES.”
4. Often forecasts are interpreted as certainties because we don’t tell them otherwise 4 @everydaykanban | @55degreesAB CC BY-SA 3.0, https://en.wikipedia.org/w/index.php?curid=3422341
5. 5 @everydaykanban | @55degreesAB The 3 Gaps Outcomes Plans Actions ! Effects Gap Difference between what we expect our actions to achieve and what they actually achieve ! Knowledge Gap Difference between what we would like to know and what we actually know ! Alignment Gap Difference between what we want people to do and what they actually do
6. 6 @everydaykanban | @55degreesAB Used with permission from Jim Benson A predictable response
7. 7 @everydaykanban | @55degreesAB EE4: Building an SSV Timeline Total expected hours Total hours Sam Jansen Expected hours Total hours Alexander Meynen Expected hours Total hours Tinus Michiels Expected hours Total hours Jeroen van Aert Expected hours Total hours Jef Van Den Bergh Expected hours Total hours Bob Verschueren Expected hours Total hours 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Tasks Subtasks wk h h h h h h h h h h h h h h Engineering a. Case SSV 1 i. Motor/ Solar panel analysis 7 4 3 ii. Gear ratio 15 2,5 2,5 10 2,5 2,5 2,5 2,5 iii. Choice of materials 10 5 1 1 1 1 1 5 1 iv. Frame design 30 15 2 1 1 1 15 1 1 v. Optimalisation (bisection method) 25 4 15 10 4 vi. Sankey diagram 10 12 10 vii. Production parts 20 10 12 10 viii. Construction 60 10 10 10 10 10 10 b. Case Simulink i. Simulation solar panel 24 4 4 4 4 5 4 4 10 ii. Simulation DC-motor 7 4 3 iii. Simulation race 6 1 1 1 1 1 1 c. Case SSV 2 i. Slope run test 24 4 4 4 4 4 4 ii. Simulation drive shaft 7 3 4 iii. Technical drawings 40 10 30 iv. Collision analysis 15 10 5 d. Race day 30 5 5 5 5 5 5 Enterprising e. Wikipage i. Company information 3 3 1 ii. SSV information 5 5 1 f. Name & Logo i. Design 2 1 2 ii. Engraving 6 3 3 g. Documents i. Plan of approach 4 2 2 2 2 ii. Work breakdown structure 4 2 2 2 2 iii. Gantt chart 10 1 5 3 5 3 iv. Cooperation contract 2 2 2 v. Case 1 document 45 5 5 15 5 5 15 5 5 15 5 vi. Simulink document 15 5 10 5 10 vii. Case 2 document 40 15 5 10 10 h. Wikipage i. Upload documents 5 5 1 ii. Blog 5 5 2 2 iii. Design description 6 3 3 iv. Final process report 5 i. Evaluation i. Test 1 30 5,00 5 5 5 5 5 ii. Test 2 30 5,00 5 5 5 5 5 iii. Peer assessments 1 total 548 0 92 27 92 25 92 21 88 22 91 25 90 25 Legende milestone responsibillity Gantt chart 1 Educating Weeks The workplace version of ruling it harder… CC BY-SA 3.0 - https://upload.wikimedia.org/wikipedia/commons/thumb/b/bf/AM4_Gantt.pdf
8. Deterministic Forecast 8 @everydaykanban | @55degreesAB IT WILL BE DONE ON X DATE •Communicates a single possible outcome •Provides no probability of that outcome •Appropriate only when certainty is assured
9. Probabilistic Forecast 9 @everydaykanban | @55degreesAB THERE’S AN 85% CHANCE IT WILL BE DONE ON OR BEFORE 
 X DATE •Two components: ‣ Range of outcomes ‣ Probability you’ll fall into that range •Appropriate whenever uncertainty is present
10. 10 Let’s create these probabilistic forecasts… @everydaykanban | @55degreesAB Single Item Forecasts Multiple Item Forecasts 📆 Fixed Date 📑 Fixed Scope 2 Types
11. For each, we can use the same simple data to calculate the probabilities 11 @everydaykanban | @55degreesAB
12. Single Item Forecasts 12 @everydaykanban | @55degreesAB How long will it take? Finish Start Cycle Time: The total elapsed time it takes a work item to travel from start to fi nish
13. 13 @everydaykanban | @55degreesAB Finish Start Cycle Time: The total elapsed time it takes a work item to travel from start to fi nish Single Item Forecasts (Finish date - start date) + 1
14. 85% of work took 16 days or less Use a Cycle Time Scatterplot to calculate probabilities 14 @everydaykanban | @55degreesAB 50% of work took 7 days or less
15. 15 @everydaykanban | @55degreesAB Wrong as much as right… Contains too many outliers Just the right balance? Ask: What is the fallout if we fall outside of the probability? by understanding your risk tolerance Choose a probability
16. 16 @everydaykanban | @55degreesAB 85% of the time we finish a 
 work item in 16 days or less 
 (from the day it starts) probabilistically Deliver your forecast
17. 17 @everydaykanban | @55degreesAB The underlying rule of thumb
18. Multiple Item Forecasts 18 @everydaykanban | @55degreesAB Finish Start Throughput: The total count of items that pass the de fi ned fi nish point in a given unit of time When will they all be done?
19. 19 @everydaykanban | @55degreesAB A Throughput Run Chart will show you the data But you need a Monte Carlo Simulation to calculate the probabilities
20. 20 @everydaykanban | @55degreesAB For Fixed Scope, use Monte Carlo: When There’s an 85% chance that we will f inish these 45 items on or before May 25
21. 21 @everydaykanban | @55degreesAB For Fixed Date, use Monte Carlo: How Many There’s an 85% chance that we can f inish 67 or more items by then
22. 22 @everydaykanban | @55degreesAB For an entire portfolio, use Portfolio Forecaster!
23. 23 @everydaykanban | @55degreesAB • When more than one outcome is possible, probabilistic forecasts are necessary. • Probabilistic forecasts show risk in 2 ways: 
 a probability (%) and a range. • Choose a % that matches your risk tolerance • Tools like ActionableAgile and Portfolio Forecaster exist to help you create these forecasts in minutes. Summary
24. @everydaykanban | @55degreesAB Thanks for listening! 🎉 Follow us on social media /company/55degrees @55degreesAB @55degreesAB /55degreesAB /c/ActionableAgileAnalytics