Forecasting For A Purpose
Authors: Zwanzig Otto E. 
Published: December 2007

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Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and considered for publication in one of the two SPE magazines with the paper.

Introduction

You may think long before this talk has been completed that the speaker is belaboring the obvious. Please let me put to rest here and now any doubt which you may have in this regard by assuring you that is precisely my intent, and for a very specific reason. We all profess to know and recognize the obvious, but I am impressed increasingly how often we forget or fail to act upon the obvious.

Shortly after starting my first job upon graduation from college, I was asked by my boss to participate in a course on practical communications, particularly as applied to conveying proposals effectively to the client — be he customer or company president. The concept or philosophy underlying this program was so simple and obvious that in my youthful brashness I saw only a gross waste by the company of a good, solid $1930 in compelling me to take the course. The sequel to this experience occurred about five years ago when I was directing a 300-man marketing group. At that time I enrolled a dozen of my department heads, and subsequently about a hundred other personnel, in the contemporary version of that same program. Why? — because they all knew the obvious, but I could see how imperfectly they were implementing it. Truly, a wide chasm exists all too often in our beliefs on the one hand and our practices on the other.

Experience leads me to believe that frequently we fall into the same trap when it comes to undertaking forecasts which are ill-suited to the purpose or to those whose purpose of necessity was improperly analyzed before proceeding. In saying this, I may be running the risk of talking our firm out of some professional assignments. Among other affiliations, we hold a membership card in the ancient and benevolent order of professional soothsayers and forecasters. I suspect, however, that if all the ill-conceived forecasts and prognostications were exhumed from their dusty file drawers, and could be piled on top of each other in staircase-fashion, this country would no longer have to worry about beating the Russians in the race to find means to put a man on the Moon.

Recently, we were asked by a well-known national real estate and land development company to forecast the timing, characteristics, and amount of commercial space which would be required in the downtown core area of a major western city. This information was wanted not merely as window dressing to impress the city planning commission and city council as part of a proposed downtown rehabilitation, but specifically to serve as the basis whereby the firm itself would develop an appropriate building program and endeavor to do millions of dollars of real estate financing. And they had budgeted a maximum of $10,000 for the survey. Needless to say, we lid not believe that a competent job could be done within this budget — and we did not get that assignment. I do not intend to be frivolous when I say, "No more use a howitzer to catch a mouse, than take along a pop gun when going elephant hunting."