Page 57 - DMGT521_PROJECT_MANAGEMENT

Project Management

Notes 4.3.3 Oregon Health Plan

Oregon has implemented an innovative health plan that rations health care by developing a
prioritized list of treatments. A cut off line is then set to determine which services would be
covered and which would not. The plan serves to increase access to health care for more Oregon
residents but cuts down on the range of services covered.

This plan allows Oregon to provide health care access to a greater percentage of its residents, but
it raises a number of ethical considerations. If ranking health care services is based on improving
quality of life rather than medical or biological outcomes, how do we evaluate quality of life? Is
it ethical to refuse to medical care based on cost-effective rankings? Does the method of ranking
by quality of life discriminate against people with disabilities?

!
Caution Successful projects begin with a detailed project definition that is understood and
accepted by Stakeholders.

4.4 Market Analysis and Demand Analysis

Forecast vs. Prediction: Forecast is an estimate of future events and trends and is arrived at by
systematically combining past data and projecting it forward in a predetermined manner.
Prediction is an estimate of future events and trends in a subjective manner without taking into
account the past data. The subjective considerations may not emerge from any predetermined
analysis or approach.
Time Horizon of Demand Forecasting: Market and demand analysis of various types are
undertaken to meet specific requirements of planning and decision making.

Example: Short-term decisions in production planning, distribution etc. and selling
individual products would require short-term forecast, up to one year time horizon, which must
he fairly accurate for specific product items. For long-term planning, time horizon being four to
five years, information required from demand analysis would be for broad product groups for
facilitating choice of technology, machine tools and other hardwares and their location.

Longer-term forecasting is also undertaken to determine trends in technology development so
as to choose the technology for backing up and funding its research and development.

4.4.1 Need for Demand Forecasting

All business planning starts with forecasting Capital investment, like procurement of raw
materials and production planning, has to relate to demand forecasting. High volume high
technology mass production systems have further highlighted the importance of accurate demand
forecasts. Even in a batch type production, any major mismatch between forecast and manufacture
will lead to higher capital tied up in finished products which are slow in selling.

4.4.2 Uncertainties in Demand Forecasting

Demand forecasting is the estimate of future demand. As the future is always uncertain, forecasting
cannot be completely fool proof and correct. However, the very process of forecasting demand
in future involves evaluating various forces and factors which influence demand. This exercise
is very rewarding in itself as it enables the personnel to know about various market forces,
currents, cross-currents and under-currents relevant to the demand behavior.

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